Monday 4 October 2021
Variable risk sentiment still prevailing as another week gets underway with equities and yields still making their mind up and we've seen mixed USD and JPY/CHF tones accordingly but with notable demand for GBP since my Friday update although capping a little this morning.
The battle to buy UK supermarket giant Morrisons has ended with US private equity firm CD&R outbidding Fortress in an auction process with an amount of almost £7 billion. The final offer for the supermarket will now be voted on by shareholders on October 19. As usual with M&A deals markets will need to know a) if the deal will go through and b) the actual cash part of the deal before we can get too excited by Forex impact but we may well be seeing some anticipiated GBPUSD buying interest. Keep an eye on this one.
Amid all this market uncertainty I will repeat that patience and discipline in trading are key, as ever, and not being greedy. Ignore the noise and countless amount of "analysts" trying to explain the reasons for moves. Just focus on the price action and decide what presents value or doesn't.
GBPUSD: A good rally on Friday exceeding expectations, including mine, but has capped at 1.3575 so far. I remain a rally seller but respecting current dip demand while keeping an eye on EURGBP and GBPJPY as always. EURGBP:Holding 0.8540 in the latest retreat from 0.8600-20 then the cap at 0.8580 amid Friday's GBP demand but the rally now to 0.8568 helping to cap GBPUSD again. Good two-way action expected still. GBPJPY:149.20 proved to be a good support as GBP demand dominated on Friday and now 150.20 seems to be the latest line in the sand but failing at 150.80 so far as risk and GBP tones soften a little.
I remain a GBP rally seller across the pairs but being patient as ever. These are risk sentiment markets and ever fickle so good/tight position management essential.
EURUSD: Holding 1.1585 now on the latest retreat after failing to rally back above 1.1620. The pair still finds itself in the middle of cross-flow action and variable risk plays.USDJPY: Good support at 110.80 and now at 111.20 again amid some firmer risk tones. EURJPY: 128.50-60 duly held and now testing 129.20 again on some better risk tones and core pair dip demand. USDCHF: Found a base at 0.9280 on Friday but testing there again now after failing into 0.9320 as EURUSD rallies. EURCHF: Holding 1.0770-75 still but with SNB shadow ever present on this and USDCHF.
AUDUSD: 0.7220 proved to be pivotal as expected and the break back up on Friday now sees a test of 0.7280 amid some better risk AUDJPY demand. Large option again interest at 0.7250 today should help keep price contained but seems to be underpinning the pair as we wait on tonight's RBA decision (03.30 GMT 5 Oct) but where little change is expected. Still good two-way business to be had whatever your bias.I remain a rally seller overall and poised to jump back in when momentum fades. USDCAD: Now testing 1.2600 amid some USD supply and CADJPY demand after Friday's failure at 1.2740. Large option interest at 1.2615-25 tomorrow will cast a shadow. Forewarned always forearmed in forex.
Saturday proved to be the saddest day of my life on so many levels following my beloved Southend United. One can only hope for some blue skies ahead but not happening any time soon it seems.
Let's continue to be careful out there in all things. Staying safe must be our main priority still.
Interbank rates: 08.45 BST
GBPUSD 1.3550
EURUSD 1.1610
EURGBP 0.8562
GBPEUR 1.1677
GBPJPY 150.76
GBPCAD 1.7113
GBPZAR 20.2503
GBPHKD 10.5632
USDJPY 111.12
EURJPY 129.07
EURCHF 1.0793
EURHKD 9.0463
AUDUSD 0.7267
USDCAD 1.2618
USDCHF 0.9292
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