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  • Writer's pictureMike Paterson

Yen supply notable

Wednesday 1 June 2022

US bond yields are on the rise again and it's USDJPY which is taking full advantage. Yesterday's solid hold of 128.50 after 128.88 highs was a good clue and we've seen further gains to 129.55 with JPY supply underpinning other core pairs through the crosses too.

Yesterday's final month-end flows into the 4pm London fix provided some lively opportunity. Long week-end in the UK starting tomorrow (Thurs) to celebrate the Queen's Platinum Jubilee.

I repeat my view that it's a case of not over-analysing but keeping your focus on price action in core and cross-pairs. We will continue to trade in ever-fickle markets so the need remains to identify ranges and what levels present value for money. Algos will continue to knee-jerk price action on the variable headlines versus natural flows. Discipline is key as ever.

GBPUSD: Some pips banked in the yesterday's retreat to 1.2560 but supported by the large 1.2550 option interest. Re-sells around 1.2600-10 per my tweets as the month-end fix created USD supply. I remain poised to sell rallies but timing as ever is crucial.EURGBP: Holding 0.8480 again then 0.8500 amid the option interest and now testing 0.8525-30 resistance again. More two-way business expected.GBPJPY: Up up and away amid the JPY supply but failing above 163.00 for the moment with sellers poised still as the risk uncertainty continues.

EURUSD: Finding a decent base at 1.0700 again but capping at 1.0740 with some more option interest in play again today. USDJPY: Solid rally to 129.55 amid the yield-led JPY supply. EURJPY: Now supported at the previous cap at 138.00 but sellers prevailinb into 139.00 for the moment. USDCHF: Still struggling to make real progress higher above 0.9600 with some CHF demand helping to cap but with SNB shadow lurking in the dips still. I expect more of the same.EURCHF: Finding 1.0280 as the support line in the latest retreat amid SNB smoothing but rally sellers continue to lurk.

AUDUSD: Still finding a base at 0.7150 but equally capping at the decent 0.7200 resistance again. GBPAUD capping at 1.7575 and testing 1.7500 again as AUDUSD demand outstrips GBPUSD again. NZDUSD now supported at the former 0.6475 line in its latest retreat and now testing 0.6500 again. GBPNZD finding support at 1.9300 this time after capping into 1.9400 as NZDUSD finds dip demand. USDCAD: On the back foot still amid firmer oil tones again after a little wobble. Capping 1.2675 but holding into fresh 1.2630 lows.

Let's continue to be careful out there.

Interbank rates: 08.58 BST

GBPUSD 1.2597

EURUSD 1.0723

EURGBP 0.8515

GBPEUR 1.1742

GBPJPY 162.96

GBPCAD 1.5918

GBPCHF 1.2103

GBPZAR 19.5130

GBPHKD 9.7998

USDJPY 129.30

EURJPY 138.78

EURCHF 1.0300

EURHKD 8.3460

AUDUSD 0.7177

USDCAD 1.2654

USDCHF 0.9601

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