Wednesday 5 October 2022
Yesterday saw mostly USD supply but as European trading gets underway it's a case of some Greenback grabbing again as the jury remains out in these ever-fickle markets.
USDJPY and USDCHF underpinned again with equities/risk appetite retreating after yesterday's solid gains accelerated by the really weak US JOLTS data. CAD demand notable still as oil rallies further and holds, albeit off its tops. NZD got a lift from the RBNZ 0.5% rate hike but gave up those gains as rapidly. Gold near its lows after failure again into $1730.
UK political backstory remains very fragile as we wait on PM Truss to deliver her rallying cry to the party faithful at 11.05 BST but not expecting any policy newsbombs. Ukraine remains the main elephant in the room along with some N. Korea missile tit-for-tat going on.
GBPUSD: Great two-way business yesterday, whatever your bias, with failure at 1.1430 initially as EURGBP bottomed out then a retreat to look at 1.1300 before rallying again to test 1.1500 amid the general USD supply and EURGBP capping at 0.8750. Patience definitely a virtue again but I prefer rally-sell side still as and when momentum fades. Cross flows still having a big impact too. EURGBP: Held 0.8650 after the break of strong tech support at 0.8662 and a strong rally to look at 0.8750 as EUR found a bid generally and GBP had another reality check.I expect more two-way business to come. GBPJPY: Fresh highs of 165.75 this time as core pairs both found good dip demand amid the better risk tones but retreating this morning as GBPUSD falls and some fragile risk returns.
EURUSD: Parity target achieved in fairly rapid time once 0.9935 broke and now trying to retreat back through that area as some USD demand returns. Cross flows, risk, Ukraine and ECB conjecture all in the frame still quite apart from USD flows. USDJPY: Extended retreat yesterday into 143.50 before sold rally.Still vulnerable to BOJ intervention/soggy risk JPY demand but underpinned into 143.80-00 again for the moment. . EURJPY: Underpinned at 143.00 for the moment amid core pair dip demand but sellers prevailing around 144.00. USDCHF: Yesterday's USD supply saw the pair capping at 0.9900 then the previous support 0.9850 as EURUSD marched ever higher but support at 0.9780 now creating another line. EURCHF underpinned with SNB keeping an eye on matters still. EURCHF: A good base at 0.9730 now with SNB still casting its shadow to add to general CHF weakness in these ever fickle times.
AUDUSD: Capping into 0.6530 in latest rallies having held 0.6460-70 and good two-way pips again whatever your bias. NZDUSD enjoyed a sharp spike post-RBNZ 0.5% rate hike before retreating into 0.8730 where we've held since as the two-way business continues. USDCAD: Support coming in at 1.3500 amid the firmer USD tones with oil rally capping too.
Let's continue to be careful out there.
Interbank rates: 08.45 BST