Monday 17 October 2022
So Kwarteng duly thrown under the bus and Hunt installed as UK Fin Min to try and bring some order back to the shambles. Seems to be working so far with plenty of reversal of mini-budget planned which is calming gilt and FX markets for the moment but the political uncertainty remains as Truss tries to cling onto power. Pound suitably finding some support but tempered by the uncertainty. Hunt due to make a couple of speeches today at 10.30 and 14.30 GMT. Markets await.
Elsewhere equities turning lower again as I type after a small rally following Friday's falls and risk remains fragile albeit with JPY gains tempered by USDJPY marching ever higher to post 148.80 this morning. Oil and gold both in retreat as I type too.
Whatever your view/take/analysis one thing is clear, we are experiencing global markets in panic/confused/second-guessing mode the like of which we haven't seen for many a year, indeed decade. As always, remember that conjecture and second-guessing should stand to one side on data and CB releases. Focus on the price action and let the algos do the heavy lifting/dropping. The important thing is to identify your preferred risk/reward entry/exit levels.
GBPUSD: Gapped higher in Asia and making further gains to test 1.1300 before falling back to test 1.1230 and some pips banked along the way. I remain a rally seller. This current government continue to give concern. Cross flows still having a big impact too. EURGBP: Finding support around 0.8615-20 again after capping at 0.8680 and sellers poised 0.8660-80 for the moment as we wait on further news from Hunt. I expect more two-way business to continue with the Eurozone facing issues of its own.
GBPJPY: Underpinned at 166.50 this time amid the GBP and USDJPY rally but capping around 168.00 so far. USDJPY still vulnerable to BOJ intervention/USD sentiment turnaround but underpinned into 148.30 now.
EURUSD: A good holds of 0.9720 in the retreat from 0.9760 as the USD demand returns and some pips banked. Cross flows, risk, Ukraine and ECB conjecture all in the frame still as well as USD flows. USDJPY: Holding above 148.30 now as the grind higher continues amid the general USD demand. Intervention of some sort can not be ruled out but will remain underpinned regardless on current US/Japan policies. EURJPY: Support now at 144.30-50 but capping into 145.00 as EURUSD retreats. USDCHF: Rallying above 1.0000 as I type amid some general USD demand and testing 1.0030 after a decent hold of 0.9980 area again as EURUSD retreats and SNB smoothes. EURCHF: Also rallying on the renewed CHF supply/EURUSD dip demand after a godd hold of 0.9750 with SNB smoothing still.
AUDUSD: Good support now between 0.6200-20 but sellers remain poised amid the general USD demand. GBPAUD failing above 1.8100 after the Asian gap higher but support building 1.8000. NZDUSD holding 0.5550 in latest retreat but sellers remain poised. GBPNZD also gapped higher on the GBP rally but finding good offers ar 2.0200. Bids building 2.0100 then 2.0050 and 2.0000. USDCAD: A fall from 1.3900 on Friday aided by oil price recovery and CADJPY demand but holding 1.3800 on USD demand and oil turning lower again and I expect two-way business overall still amid the fickle oil and risk variables.
Interbank rates: 08.58 BST
GBPUSD 1.1257
EURUSD 0.9751
EURGBP 0.8660
GBPEUR 1.1550
GBPJPY 167.35
GBPCAD 1.5590
GBPCHF 1.1301
GBPZAR 20.5076
GBPHKD 8.7871
USDJPY 148.64
EURJPY 144.94
EURCHF 0.9745
EURHKD 7.6079
AUDUSD 0.6248
NZDUSD 0.5600
USDCAD 1.3811
USDCHF 0.9994
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