Friday 29 October 2021
Nothing much of note from the ECB yesterday apart from the usual inflation denial but it seems EUR doves slightly over- cooked it and we saw a decent rally in EUR pairs helped by the large EURUSD option interest at 1.1600-25 and generally softer USD tones. Rally sellers have prevailed since though and we've seen some retracement.
Variable risk and USD sentiment still evident this morning in the ever-fickle world of Forex with some JPY and CHF demand notable still but equities and oil remain underpinned overall. Gold back below 1800. The final estimate of month-end FX hedge rebalancing from Citi again points to an "above average" USD selling with the strongest sell signal in USDJPY still so keep that in mind until today'a 4pm London fix even though much it will have been done by now.
For FX markets focus on the price action and decide what presents value or doesn't, and if in doubt, keep out. Be aware of those rising support lines and/or falling resistance levels. Forex is not rocket science but it is ever-fickle so you have to stay in control of you/your trades as much as you can.
A reminder that UK/European clocks go back 1 hour this Sat night/Sun morning. USA and Canada put theirs back the following week-end (Nov 7).
GBPUSD: The pair held around the 1.3730 support yesterday and some pips banked in the retreat per my tweet. Seeing some softer tones again this morning after yesterday's rally into 1.3820 on the softer USD tones. Some re-sells duly placed per my tweet (1.3805) and capping helped by some GBPJPY supply and EURGBP demand again.I remain a rally seller overall but still respecting the ongoing dip demand as we continue to range while keeping an eye on EURGBP and GBPJPY as always. EURGBP: 0.8440 now providing a line of support but sellers still poised at 0.8480-85 after yesterday's extended break of 0.8460-65 on the general EUR buying. GBPJPY: Support coming in around 156.30 now but failing at 157.00 on the softer GBP and variable risk tones.
I remain a GBP rally seller across the pairs overall as my preferred trading side albeit against the grain currently so being patient as ever. These markets are ever-fickle so good/tight position management essential.
EURUSD: 1.1600-25 options interest providing support through the ECB before an extended rally to 1.1692 on the gneral EUR demand but retreating into 1.1650 this morning ahead of decent option interest rolling off today.
USDJPY: Finding good support around 113.25-30 yesterday but sellers poised at 113.80 still too. EURJPY: Support line now at 132.00 but with rally sellers ever poised again as the picture remains murky and the Euro finds supply in the bounces. USDCHF: 0.9160 and 0.9130 support broken in the general USD supply but with the SNB ever vigilant and now the pair holding 0.9100 but equally sellers remain poised as I've been warning as EURCHF struggles to recover. EURCHF: Those 1.0630-35 bids now blown but holding 1.10620 as I type amid the extended fall/ notable CHF demand still but with the SNB ever vigilant. Sellers in the rallies still though.
AUDUSD: 0.7500-20 now providing good support but failing at 0.7560 so far and retreating this morning amid some general USD demand. USDCAD: Rallied on some CADJPY selling amid mixed oil price but notably still failing at 1.2380 albeit with support at the old line of 1.2320. Some option interest today in play.
Have a good week-end everyone. Let's continue to be careful out there in all things. Staying safe must be our main priority still.
Interbank rates: 08.40 BST