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  • Writer's pictureMike Paterson

Wobbly risk tones continue

Wednesday 6 July 2022

Fragile risk tones still prevailing as the week hits hump day with oil on a significant slide amid fears of impending global recession. Gold and other metals still wobbly too but equities off their lows after a solid slide yesterday. JPY demand notable sending cross and core pairs lower but USD demand overall still.

Yesterday the BOE published its latest Financial Stability report and it didn't make pretty reading for the UK economy, then came a number of UK government resignations in protest/political positioning over PM Johnson's integrity including Fin Min Rishi Sunak who has been replaced by former Education minister Nadim Zahawi. No huge policy changes expected at this stage and Johnson will cling onto power for the moment but its only a matter of time before he's gone and the political uncertainty will continue to weigh on GBP.

Be ready with your preferred levels/strategy, place orders and let the algos do the heavy work. Discipline is key as always but equally hesitation can often ruin a great idea.

GBPUSD: A solid retreat yesterday finally breaking down through the decent support between 1.1965-75 and a test of 1.1900 on the softer risk GBPJPY supply and USD demand overall. I remain poised to sell rallies. Timing as ever is crucial.Decent cap now at that 1.1965-75 area so far in the bounce.EURGBP: A cap this time at 0.8610 after testing the strong support around 0.8550 again as jury remains out and plenty of second-guessing of the ECB and BOE still. Great two-way pips as I've been highlighting for a while now.GBPJPY: Capping at 163.50 then 163.00 and 162.00 but holding 161.00 so far in the extended retreat. I think the variable sentiment will help provide good two-way pips still for the moment but seems the bias is softer, which suits me.

EURUSD: Capped into 1.0400 then 1.0300 as the retreat continued further amid the general EUR supply to test 1.0230-35. Ukraine and ECB still remain the elephants in the room. USDJPY: Capped around 136.20 this time and since tested 135.00 amid the softer risk tones/JPY demand.Some pips banked along the way again with dip demand still seen for the moment but I'll remain poised to sell rallies when momentum fades. EURJPY: Sharp retreat from 140.00 to post lows of 138.25-30 amid the general EUR supply and softer risk tones returning. Rally sellers poised still when sentiment turns softer so I hope the steer has helped. USDCHF: Support at 0.9650 now as EURUSD retreats but EURCHF slide tempering gains through 0.9700 so far. Jury remains out on SNB and amid variable risk but CHF still in demand as further tightening expected. EURCHF: A further retreat to 0.9912 amid the softer risk and EUR supply double-whammy. Maybe witnessing some SNB support but sellers will remain poised still as I've been warning.

AUDUSD: Further retreat to test 0.6750-60 amid AUDJPY supply and wobbly metals price still and subsequent rally capped around 0.6825. GBPAUD currently trading 1.7550-1.7650. NZDUSD in further retreat yesterday and testing 0.6125 support and now testing 0.6180-85 cap as I type. GBPNZD bids into 1.9350 now after breaking down through 1.9400 and capping there since.USDCAD: Another sharp rally to look at 1.3075 amid the CADJPY supply/oil price tumble and general USD demand triple whammy but sellers still poised amid the fragile/fickle moves.

Let's continue to be careful out there.

Interbank rates: 06.45 BST

GBPUSD 1.1930

EURUSD 1.0250

EURGBP 0.8589

GBPEUR 1.1642

GBPJPY 161.37

GBPCAD 1.5573

GBPCHF 1.1578

GBPZAR 19.8780

GBPHKD 9.3091

USDJPY 135.27

EURJPY 138.62

EURCHF 0.9922

EURHKD 7.9974

AUDUSD 0.6787

USDCAD 1.3047

USDCHF 0.9680

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