Monday 1 November 2021
Fun and games on Friday amid the month-end flows, rebalancing and variable risk tones.After the EUR strength on Thursday on a combination of some general USD supply (possibly linked to month-end), oversold positions into ECB who told us nothing new, and finding support again between 1.1600-25 on strong option interest we've seen solid falls again since.
The extent of Friday afternoon's move lower in EURUSD and GBPUSD particularly was slightly more difficult to rationalize but my guess is the stronger USD tones generally were down to month-end USD supply having been completed/over-cooked and again some stop-losses triggered as the re-balancing into/at month-end triggered some further demand. Tne fact we also saw limited moves up in USDJPY and USDCHF suggest some some risk-off selling in JPY and CHF cross pairs pairs too adding to the momentum in the core pairs. It was the last day of the month falling on a Friday and some reduced liquidity adding to the extended moves.
You know my thoughts by now about not over-analyzing FX moves anyhow. It's really about deciding what presents value or not, and eventually all these moves find that level and become over-bought or over-sold. What happens in between is the "noise". It's important to identify on-going ranges and trade the momentum if broken but not getting greedy if they stay intact. Forex is not rocket science but it is ever-fickle so you have to stay in control of you/your trades as much as you can.
Firmer risk and USD sentiment again evident this morning but with some JPY and CHF demand notable still but equities and oil remain underpinned overall. Gold back down testing 1780.
A reminder that UK/European clocks went back 1 hour at the week-end so UK time is now GMT. USA and Canada put theirs back this week-end (Nov 7).
GBPUSD: Lows now posted of 1.3643 after breaking back down through 1.3700 on Friday amid the USD demand. I remain a rally seller overall as we continue to range while keeping an eye on EURGBP and GBPJPY as always.
EURGBP: 0.8440 again providing a line of support but sellers still poised at 0.8480-85. GBPJPY: Support coming in around 155.75 after the latest retreat which has outstripped the USDJPY rally and justfying my ongoing strategy. Sellers poised at 156.30-50 now.
I remain a GBP rally seller across the pairs overall as my preferred trading side albeit against the grain currently so being patient as ever. These markets are ever-fickle so good/tight position management essential.
EURUSD: I've already discussed Friday's dramatic reversal lower in this pair but all moves relative these days and we're finding support below 1.1550 so far while the pair remains in the middle of cross-flow action, firmer USD and dovish ECB overall. USDJPY: Finding good support around 113.80 now on the general USD rally after capping on Friday but been back to 114.44 since before capping again. EURJPY: Support line now at 131.60 but with rally sellers ever poised, this time at 132.40-50 as the picture remains murky and the Euro finds supply in the bounces. USDCHF: 0.9100 support duly held with the SNB ever vigilant but now the pair failing at 0.9180 and 0.9160 as sellers remain poised as I've been warning as EURCHF struggles to recover.EURCHF: Now testing 1.0580 amid the extended fall/ notable CHF demand still but with the SNB ever vigilant. Sellers in the rallies still though.
AUDUSD: Struggling now to break back up through 0.7520 after breaking amid the persistent USD demand but holding 0.7480 so far. Latest RBA decision in the frame tonight. USDCAD: Rallied on Friday helped by the firmer USD and some CADJPY supply but failing at 1.2400 on firmer oil tones albeit with support now at 1.2350-60 with some option interest today there in play.
Disappointing 1-0 loss for the Shrimpers of Southend on Saturday. I thought we had done enough to earn a point. Impresssive debuts from new loanees give some hope moving forward.
Let's continue to be careful out there in all things. Staying safe must be our main priority still.
Interbank rates: 08.50 GMT
GBPUSD 1.3660
EURUSD 1.1570
EURGBP 0.8472
GBPEUR 1.1800
GBPJPY 156.00
GBPCAD 1.6921
GBPZAR 20.9241
GBPHKD 10.6411
USDJPY 114.26
EURJPY 132.18
EURCHF 1.0595
EURHKD 9.0179
AUDUSD 0.7503
USDCAD 1.2387
USDCHF 0.9220
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