US Dollar softer as Fed cuts rates again

Thursday 31 October 2019

Last night the US Federal Reserve cut rates by 25bps as expected but turned a little more neutral than some bears would have liked with regard to future policy. Initial response therefore was muted and saw a sell rumour/buy fact USD move but the rally was short-lived and since then USD supply has been notable.

Elsewhere risk sentiment seems steady still with US-China trade talk progress still in the frame but the APEC Summit on 16-17 November has been cancelled due to Chilean civil unrest. Meanwhile General Election fever continues to unfold in the UK and markets/traders/analysts continue to assess just how much of a proxy Second Brexit Referendum it will turn out to be. Jury out still IMHO.

GBPUSD finally climbed back above 1.2900 to test 1.2950 helped by the softer Greenback and some risk-on sentiment negating the month-end EURGP demand.Caution needed both sides of the coin as the next stage in the Brexit/General Election plays out. EURGBP also tightly bound as core pairs both rally and month-end Euro demand being negated by some general GBP buying.GBPJPY also continues to see good two-way trading amid the varying GBP/risk sentiment combo but remains underpinned.

I will continue to rally-sell GBP as my preferred strategy overall too amid the ongoing Brexit uncertainty but always happy to buy back in the dips still. Still a decent case for GBP longs in the dips if this tight range continues. In essence the general uncertainty and can kicking continues and that's still Pound negative. Current price action supports longs but sellers remain poised.

EURUSD has been up to post 1.1175 highs helped by the softer USD but entering into a area where we have a cluster of option expiry interest today. USDJPY had a flick up to look at 109.30 immediately after the FOMC announcement bu rally sellers, including me, were keen to take advantage and some profit into 108.50 now duly taken. The BOJ left rates on hold amid a whole load of hot air about further easing but we've heard that for a long while now and markets have been duly unimpressed. A further fall this morning on US-China trade talk concerns only confirming my view .USDCHF has slid back as EURUSD rallies and USD falls with EURCHF still supported and now posted fresh recent lows of 0.9865.

AUDUSD has found a little support from the generally softer USD to post 0.6930 but the pair still has sellers poised and retreating this morning helped by some AUDJPY risk-off supply. USDCAD has rallied to post 1.3177 since the BOC left rates on hold as expected but lowered growth forecasts and has been resilient to the Fed rate cut.

Fickle Forex markets ever prevailing so be ready with your entry/exit levels and orders as always.

Don't forget I offer 1-2-1 mentoring if there's areas of trading this latest volatility, or how to make best use of the order boards and expiries that you might need some further help with.

Have a good day out there one and all.

Interbank Rate 08.20 GMT

GBPUSD   1.2940

EURGBP   0.8623

EURUSD   1.1159

GBPEUR   1.1597

GBPAUD   1.8713

GBPCAD   1.7031

GBPJPY   140.54

GBPZAR   19.6025

GBPHKD   10.0324

USDJPY   108.58

USDZAR   15.1576

EURJPY   121.19

EURCHF   1.1023

EURHKD   8.6508

AUDUSD   0.6915

USDCAD   1.3158

USDCHF   0.9878