Tuesday 22 December 2020
I warned yesterday of thin liquidity in markets this week adding to the volatility/fragility and that was a major contributing factor to yesterday's wild and wacky return ride for the Pound along with the many news headlines.
Definitely a case to say we simply saw a correction to last week's happy-clappy buying but equally there's no doubting the dip demand too and the jury remains well and truly out as we expect Barnier to address the EU on latest Brexit developments at 15.00 GMT today. Yesterday we had reports the Johnson might relent on some fishing rights which saw a sharp GBP rally and now as the ink dries on this update we've just seen another tumble on reports of the EU denying its acceptabe.The latest UK COVID restrictions are still very much in the mix too and UK/EU talks on travel bans/blockades still ongoing.
In the US we finally got the nod on a $900bln stimulus package as widely expected but risk sentiment remains on the back foot with some year-end position squaring underway too.
GBPUSD had a wild ride and too many moves to list here but suffice to say we held decent support between 1.3180-00 before breaking up through the 1.3300 area where we were contained by large option expiries before finally bursting through the pivotal 1.3360 area to test 1.3480 and now back down to test 1.3360 on those latest Brexit headlines. I hope my tweets gave you a steer.
EURGBP enjoyed its own rollercoaster ride as did all GBP pairs ofc and we saw highs of 0.9217 (GBPEUR down to 1.0840) before tumbling to 0.9060 (GBPEUR up to 1.1038) and now back up to 0.9115 (1.0970). Keep up at the back! GBPJPY found support at 137.00 but finding a cap around 139.50 again.
Patience continues to be a virtue and rally-selling in GBP pairs bringing reward again but entry level key as always. Definitely will continue to see some dip demand as the negatives get factored in so equally may be a case for going long in the dips too but not my preference. Brexit still the large elephant in the room and now COVID once again stealing headlines too, and some.
USDJPY failed above 103.80 as softer USD tones returned and with JPY demand notable on the softer risk plays but good demand into 103.00 still.EURJPY remains underpinned around 126.00 but 126.60 still providing a decent cap amid softer risk tones.EURUSD duly found support around the strong 1.2130 area again and then bounced back through 1.2160 helped by those large option expiries before testing 1.2250 again in a steady line only to run out of puff again. USDCHF capped into 0.8920 again but now held around 0.8850 on the retreat amid mixed USD tones and EURCHF underpinned still with the SNB ever watchful.
AUDUSD enjoyed a further fall to test strong support at 0.7460 before bouncing equally as rapidly to test 0.7570 helped by large AUDNZD expiries I warned about here and on Twitter.
USDCAD had a decent return journey up to 1.2950 and back to 1.2830 amid the variable USD tones and softer oil combo.
Markets are ever-fickle so don't forget to contact me if there's areas that you might need some further help with.
Let's continue to be careful out there in all things. Staying safe must be our main priority still.
Interbank rates: 08.28 GMT
GBPUSD 1.3435
EURUSD 1.2215
EURGBP 0.9088
GBPEUR 1.1002
GBPAUD 1.7778
GBPCAD 1.7293
GBPJPY 138.90
GBPZAR 19.5622
GBPHKD 10.3890
USDJPY 103.38
USDZAR 14.6091
EURJPY 126.27
EURCHF 1.0841
EURHKD 9.4446
AUDUSD 0.7557
USDCAD 1.2869
USDCHF 0.8874
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