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  • Writer's pictureMike Paterson

Yen demand notable post-FOMC

Thursday 21 March 2019

We've now had the latest US Fed FOMC interest rate/policy decision and algos/traders sold the Greenback on their now saying no rate hikes expected in 2019. I said yesterday to expect more dovish tones and that's been duly delivered. I repeat my long-held view that the Fed would struggle to hike rates this year and have, in any case, under-delivered on rate hike promises/projections over a few years now.

We've seen a mixed bag USD-wise after the initial knee-jerk selling but unwinding of short JPY positions has been notable since with USDJPY lower and testing 110.30 support with EURJPY, GBPJPY and AUDJPY also lower and capping/driving down core pairs.Year-end Yen repatriation prob also helping as I've been highlighting in my client update

After capping at 1.3250 GBPUSD has fallen again into the 1.3150-60 support area I've also been warning about helped by the GBPJPY supply while EURGBP has remained underpinned on the general GBP softness and now posted highs of 0.8667 (GBPEUR down to 1.1536)

I remain GBP bearish overall and continue to rally-sell as my preferred strategy but I continue to see good two-way business. I repeat that political risk is huge in all scenarios and for me negates much of the No Brexit positive tones. PM May's statement last night was a desperate attempt to blame parliament for her own lack of delivery on Brexit and her time at No 10 is surely now up sooner rather than later. In any case she travels to Brussels today for an EU summit with Brexit delay discussions high on the agenda.

EURUSD has been back down helped by that EURJPY selling to look at 1.1400 where $3bln of option expiries are notable today while USDJPY has fallen further to now test support at 110.30.

USDCHF has held 0.9880-00 and rebounded to 0.9934 on the retreating EURUSD and inherent EURCHF dip demand still with the SNB ever-watchful. This morning they left rates on hold and repeated their intention to intervene to prevent significant appreciation of the Franc.

AUDUSD held 0.7120-25 on the post-FOMC retreat and rallied only to halt at 0.7170 before falling back to 0.7140 on the AUDJPY supply. USDCAD again held the 1.3250 support area only to fail into 1.3320.

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

Have a good day out there one and all.

Interbank Rate 08.15 GMT

GBPUSD   1.3174

EURUSD   1.1407

EURGBP   0.8658

GBPEUR   1.1548

GBPAUD   1.8434

GBPCAD   1.7521

GBPZAR   18.6674

GBPHKD   10.2138

USDJPY   110.36

USDZAR   14.1835

EURJPY   125.85

GBPJPY   145.43

AUDUSD   0.7145

EURCHF   1.1317

EURHKD   8.8447

USDCAD   1.3301`

USDCHF   0.9924

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