US Dollar buying still notable as another week closes

Friday 19 October 2018

Lots more Brexit noise as we might expect and plenty of conjecture over the extension to the extension pros and cons but it's the Greenback that still looks like the best of an average bunch after those slightly hawkish FOMC Minutes and Trump vowing to cut the budget deficit. Markets remain nervous/uncertain though with latest data from China a little soggy and that's also lending itself to a bit of safe-haven Yen and Swiss Franc demand.

GBPUSD broke down through that decent support around 1.3080 and has traded at 1.3015 helped by lack of positives from Brussels, general USD demand and GBPJPY/GBPCHF selling. We've rallied a little but failed into 1.3050. Delicately poised as European trading gets underway.Immediate sell interest at 1.3035 then larger at 1.3050 then 1.3080 and 1.3100.Immediate demand still around 1.3000 then more at 1.2975-80, 1.2960, 1.2930 and 1.2900. I remain a GBP rally seller for the moment whilst respecting the dip demand so still not getting too ambitious for the moment but the strategy continues to work well.

EURGBP has failed above 0.8800 again (GBPEUR support around 1.1350) helped by some general Euro supply with Italy and Merkel's political fate still in focus. Sellers still poised around 0.8810 again then 0.8830 and 0.8850. Immediate bids/support at 0.8770 then larger between 0.8750-60, 0.8730 and 0.8700 still. BOE's Carney speaks in NY later today (speech published at 17.10 BST) so we wait to see if he produces anything of note.

EURUSD has broken down further and now taken out the bids/support at 1.1450 to post lows of 1.1432 helped by EURJPY and EURCHF selling. Large option contracts rolling off today at 1.1400, 1.1420 and 1.1500 shoulfd help contain the range.Bids/support still around 1.1430 and 1.1400 then 1.1385 and 1.1360 with sellers now poised at 1.1480, then 1.1500, 1.1520 and 1.1550 still.

USDJPY failed above 112.70 and has been back down to 112.14 on the risk-off Yen buying only to bounce bakc to 112.54 amid the general USD demand. Large option contracts rolling off today at 112.50 in play and should help cap rallies. Bids/demand now around 112.20 then 112.00 and 111.85 still with decent sell interest into 112.80 and 113.00 still. I remain a rally seller for the moment. USDCHF has also found buyers in the dips again to test 0.9980 but rallies also tempered by CHF demand which has seen EURCHF lower testing 1.1400. EURCHF demand between 1.1380-1.1400 still with sellers at 1.1430 then 1.1460 and between 1.1480-1.1500 still. USDCHF bids now at 0.9950 then 0.9920 and 0.9900 with sell interest around 0.9980 still then larger into 1.0000. I remain a dip buyer on both.

AUDUSD still remains on the back foot and has fallen below 0.7100 pushed lower also by the weaker Chinese data.Large option contract expiries today at 0.7150 should contain rallies. Immediate demand still at 0.7080, then 0.7045-50 with sellers poised between 0.7120-30 and 0.7150 still then 0.7180 and 0.7200. USDCAD has been up to 1.3089 on the US$ buying after holding 1.3030. Immediate sell interest now at 1.3080-85 and 1.3100 with buyers at 1.3030, 1.3000, 1.2980 and 1.2960. Focus also on next week's BOC interest rate meeting where a hike is widely expected and that should help the Canadian $ in the near term.

Fickle Forex markets ever prevailing so get your orders in to take full advantage of these moves.

Tomorrow the mighty Shrimpers of Southend United return to the hallowed Hall looking to build on a decent run which has seen a push up the table to challenge for promotion places. Still a long way to go of course but bring it on!

Have a great week-end out there one and all, wherever yours takes you.

Twitter: @MSPFX and @MikePatersonFX

Interbank Rate 08.13 BST

GBPUSD 1.3030

EURUSD 1.1443

EURGBP 0.8782

GBPEUR 1.1386

USDJPY 112.54

USDCAD 1.3063

USDCHF 0.9973

GBPAUD 1.8328

GBPCAD 1.7015