Wednesday 2 September 2020
So the start of a new month eventually brought with it some USD demand again but not before further losses and the jury is still out. Nothing has changed fundmentally but FX markets have a habit of overstaying their welcome and corrections are invariably needed. Yesterday's US data helped turn USD sentiment around but not the only reason. More like the straw that broke the camel's back.
That doesn't mean we are witnessing the start of a large reversal given that nothing's really changed but equally we might argue that the recent USD supply has been overdone helped by those month-end flows again.
Either way we do not have a crystal ball so we must continue to trade what's in front of us ( or choose to stand back as the case might be) and let market forces be guided by the Forex gods. Ours is not to reason why, ours is just to sell and buy.......
CB speeches today from BOE's Vlieghe and Bailey at 13.30 GMT then Haldane and Broadbent at 14.30 GMT with US Fed's Williams at 14.00 GMT and Mester at 16.00 GMT.
GBPUSD continued its rise to test the 1.3480 area but once that failed we saw the turnaround in momentum amid some US Dollar demand and now posting lows of 1.3325.EURGBP fell through 0.8920 but held 0.8900 initially before falling through to 0.8890 as EURUSD retreated from 1.2000 and remains a little soggy as I type.GBPJPY drove up through 142.00 to test 142.50 but now falling through 141.50 on the general GBP/risk retreat.
I stay poised to sell GBP rallies overall as my preferred side and buy back in the dips as ever. Patience continues to be a virtue and entry level key as always. I still expect to continue seeing dip demand though should we retreat further at this time.
USDJPY continues to range 105.50-106.50 on the wide (105.80-106.30 the close touch) amid the generally variable risk and firmer USD combo and option expiries. EURJPY had a quick look at 127.00 but now testing 125.80-00 amid the general EUR retreat and softer risk. EURUSD duly capped at 1.2000 helped by those large expiries and some dovish ECB Lane comments and needed little encouragement to fall as the USD demand returned and now looking at 1.1865-75 where we also have large option expiries today. USDCHF duly found a base at 0.9000 (possibly SNB) as I highlighted yesterday and has rallied to 0.9130 as EURUSD retreats and EURCHF remains underpinned.
AUDUSD has had its own retreat amid the USD demand and helped by some soggy GDP data but has found a base at 0.7330 for the moment. USDCAD found that base at 1.3000 but since struggling to hold over 1.3080 as oil price remains firm.
Markets are ever-fickle but good two-way pips to be had so don't forget to contact me if there's areas of trading these markets 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: 08.18 BST
GBPUSD 1.3338
EURUSD 1.1881
EURGBP 0.8907
GBPEUR 1.1228
GBPAUD 1.8136
GBPCAD 1.7433
GBPJPY 141.46
GBPZAR 22.2925
GBPHKD 10.3410
USDJPY 106.06
USDZAR 18.7134
EURJPY 126.00
EURCHF 1.0823
EURHKD 9.2100
AUDUSD 0.7352
USDCAD 1.3071
USDCHF 0.9112
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