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  • Writer's pictureMike Paterson

Risk tones turn a little softer again

Wednesday 29 June 2022

Some softer risk sentiment again this morning amid the ongoing backdrop of war in Ukraine with equities off yesterday's highs and JPY demand notable again helping to cap cross and core pairs. Gold on fresh recent lows but oil price coming off its lows as I type.

Yesterday I warned "Month-end Spot dealing date today so keep your eye on the 4pm BST London fix as usual for USD net flow business" and followed that up with another email warning of USD demand which we duly got. I hope you took advantage. This morning we've seen softer German inflation data but higher Spanish figures to keep ECB on their toes. Fed's Mester has called for 0.75% rate hike at July meeting but mostly priced in now anyhow.

A reminder that the ECB's June Sintra Forum finishes today with another raft of speakers. Schnabel and Lagarde at 11:00 BST. Lagarde, Fed Chair Powell Powell, BoE Governor Bailey, and Former Banxico Governor Carstens speak at 14:30 BST.

As ever, deal on fact not second-guessing. Be ready with your preferred levels/strategy, place orders and let the algos do the heavy work. Discipline is key as always but equally hesitation can often ruin a great idea.

GBPUSD: Another retreat after the break of the decent 1.2220-30 support line helped by the general and month-end USD demand. A good hold of 1.2175 and pips banked along the way but I remain poised to sell rallies. Timing as ever is crucial.Patience and discipline have indeed been a virtue on this one yet again.EURGBP: Capping at 0.8640 again as we continue to range and holding 0.8600-10 still as jury remains out and plenty of second-guessing of the ECB and BOE still. GBPJPY: 165.50 still holding retreat this morning after capping into 166.30 as I type as the latest firmer risk rally faltered. I think the variable risk tones will help to keep contained still but looks underpinned for the moment.

EURUSD: Capped into 1.0580 then 1.0540 amid the month-end USD demand yesterday and finally broke through 1.0520 on the 4pm London fix USD demand but underpinned around 1.0480 in the retreat. Ukraine still remains a very big elephant in the room.

USDJPY: Finding support into 135.75 and a few pips banked after failure into 136.40 as some softer risk JPY demand returned. Dip demand still expected for the moment.EURJPY: 143.00 support broken after failing at 143.50 but more coming in at 142.50 to bounce back through 143.00 as I type. Rally sellers poised still when sentiment turns softer. USDCHF: Support at 0.9540 for the moment with more behind at 0.9520-30 but with sellers poised into 0.9580-00 still. Jury remains out on SNB and amid variable risk but CHF still in demand as further tightening expected. EURCHF: CHF demand outstripping EUR demand still and now with softer risk tones we've seen a test of 1.0020 after failure into 1.0080 area again. Sellers will remain poised. I hope the steer has helped re CHF strength but SNB to defend 1.00? I would have thought so but we'll see....

AUDUSD: Capping at 0.6940 then 0.6920 after the break lower and now testing 0.6875 again amid some softer risk /firmer USD double whammy. GBPAUD back up through 1.7700 as I type after holding 1.7600 this time amid the extended AUDUSD retreat. NZDUSD also looking soggy amid the firmer USD and some NZDJPY and NZDCHF supply. Testing support now into 0.6200-20. GBPNZD finding support at 1.9450 still and now 1.9500 and now 1.0560 in softer NZD bounce so far. USDCAD: A good hold of 1.2820-30 then 1.2850 amid the general USD demand and some CADJPY supply but sellers still poised 1.2880-00 on the variable risk/oil tones.

Let's continue to be careful out there.

Interbank rates: 08.40 BST

GBPUSD 1.2195

EURUSD 1.0515

EURGBP 0.8625

GBPEUR 1.1600

GBPJPY 166.00

GBPCAD 1.5687

GBPCHF 1.1625

GBPZAR 19.6360

GBPHKD 9.4882

USDJPY 136.07

EURJPY 143.12

EURCHF 1.0065

EURHKD 8.1795

AUDUSD 0.6887

USDCAD 1.2869

USDCHF 0.9570

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