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  • Writer's pictureMike Paterson

Softer risk tones after FOMC Minutes confirm taper talk

Thursday 8 July 2021

Yesterday I warned here that " risk remains fragile and FX rallies have been weak so far " and so it proved. The US Federal Reserve FOMC Minutes did indeed cause some algo-led volatility and the confirmed/increased taper talk has duly put a wobble into equity and commodity markets with JPY and CHF demand once again notable. I hope the ongoing steer has helped.

US 10-yer bond yields falling to 1.30% not seen since February adding to the risk-off tones but the USD/forex jury remains out still. Patience and discipline in trading are key as ever and not being greedy as we continue to range tightly overall but good to see some greater levels of volatility return.

ECB's Lagarde speaks at 12.30 GMT following the publication of their strategy review at 11.00 GMT with talk of a new inflation goal of 2% and allowing overshoot.

GBPUSD: 1.3820 support now resistance as the bids into 1.3750 get tested and a bounce before falling yet again.Some re-sells duly placed and pips banked in the retreat per my tweets. Softer risk tones driving JPY pairs lower. I remain a rally seller but still expecting dip demand. Keeping an eye on EURGBP and GBPJPY as always.

EURGBP: Finding buyers now into 0.8550 as GBPUSD outstrops EURUSD in the retreats but sellers still into 0.8580-85 as we continue to range.GBPJPY: The anticipated slide continues amid the softer risk sentiment providing Yen demand again and now testing 151.20 after capping around 152.50 this time. Rally sellers poised still when momentum fades.

I remain a GBP rally seller across the pairs but being patient as ever. Risk to the downside though still overall.

EURUSD: Broke 1.1800 but decent interest at 1.1780 so far helping to keep it underpinned but also capped around 1.1820-30 amid the variable cross flows ( EURJPY, EURCHF down, EURGBP underpinned but capping still) and some pips banked from re-sells. USDJPY: A good cap at 110.80 again then 110.50 in Asia as the JPY demand accelerated to now test 109.75-80 once we had triggered stops through 110.25. EURJPY: Bids at 130.50 broken and a steady retreat as risk-off plays accelerate. Rally sellers popised still. USDCHF: CHF demand notable again and will have the SNB ever vigilant as EURCHF sinks back further too amid the risk-off tones. EURCHF: Holding 1.0900 now in latest retreat with SNB shadow/help ever present but rally sellers also poised still.

AUDUSD: Another solid retreat helped by the AUDJPY selling into good support at year-lows of 0.7420-30 now and pips duly banked along the way. USDCAD: Strong support area now at 1.2450 helped by oil prices falling further and CADJPY selling notable again. 1.2480-00 sell interest now history and marching onto 1.2600 as I type.

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

Come on England !!!!!!!!!!!!!!!!!!!!

Interbank rates: 08.33 BST

GBPUSD 1.3775

EURUSD 1.1802

EURGBP 0.8568

GBPEUR 1.1671

GBPCAD 1.7292

GBPJPY 151.50

GBPZAR 19.8210

GBPHKD 10.6798

USDJPY 109.97

USDZAR 14.3787

EURJPY 129.82

EURCHF 1.0893

EURHKD 9.1507

AUDUSD 0.7437

USDCAD 1.2554

USDCHF 0.9228

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