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  • Writer's pictureMike Paterson

Risk sentiment wobbly again

Tuesday 30 November 2021

COVID fears and concerns very much still lurking as I warned yesterday (not rocket science to be honest) with markets second-guessing how it might all impact Central Bank action amid the increased economic uncertainty and markets are now running for the hills again.

Throw those USD negative month-end flows into the mix too and we've seen some decent turnarounds in equity/commodity markets and forex with JPY, CHF and EUR demand back making an impact as the expected ECB interest rate divergence with the Fed reduces.

As always, don't over-analyze but keep your focus on price action in core and cross-pairs and recent ranges to see whether we hold or break and what levels present value for money. If in doubt, stay out.

GBPUSD: Underpinned by the general USD selling but capped by EURGBP demand and GBPJPY supply so tightly bound for the moment still.GBPUSD rally sellers, including me, ever poised while keeping one eye at least on the EURGBP and GBPJPY cross flows. EURGBP: Those Friday highs of 0.8495 now broken amid the general EUR safe-have/funding currency demand after forming a decent base at 0.8475-80. Expect more 2-way business will sellers poised around that key 0.8520 area but will remain underpinned as long as risk sentiment remains sour and provides EUR demand still. GBPJPY: 150.60 support has broken after capping at the 151.60 offers but finding a little support back at 150.60 as I type.

I remain a GBP rally seller across the pairs overall as my preferred trading side albeit still against the grain currently so being patient as ever. These markets are ever-fickle so good/tight position management essential.

EURUSD: Support/bids now at 1.1300-20 amid the EUR funding-currency/safe-haven demand that I've been highlighting but sellers poised 1.1380-00. USDJPY: 113.00 now broken amid the COVID risk-off plays and month-end USD supply. Pips banked in the retreat into 112.80 again after rally re-sells around 113.60 per ongoing strategy. EURJPY: 127.80 support that saw on Friday back in play atm after the retreat from the 128.60 that I highlighted yesterday but we should expect some tight ranging as EUR demand contras JPY demand. USDCHF: Support at 0.9220 now history as we fall to 0.9180 with the SNB ever vigilant but seemingly not standing in the way of a moving truck right now but comforted that EURCHF is holding up amid the general EUR demand.Those 0.9275 options yesterday certainly helped to cap along with the general USD supply. EURCHF: New lows of 1.0416 but EUR demand helping to hold with SNB shadow lurking.

AUDUSD: 0.7160 capping the rally with good size option interest at 0.7165 in play but equally finding some support around 0.7100 still. USDCAD: Capped above 1.2800 again as I type after a good hold of 1.2740 helped by the lower oil price CADJPY supply outpacing the general USD supply. Support now comes in at 1.2780.

Let's continue to be careful out there in all things. Staying safe must be our main priority still.

Interbank rates: 08.48 GMT

GBPUSD 1.3352

EURUSD 1.1350

EURGBP 0.8500

GBPEUR 1.1765

GBPJPY 150.70

GBPCAD 1.7094

GBPZAR 21.5463

GBPHKD 10.4035

USDJPY 112.82

EURJPY 128.08

EURCHF 1.0438

EURHKD 8.8395

AUDUSD 0.7114

USDCAD 1.2803

USDCHF 0.9192

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