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  • richard evans

Currencies stuck in tight ranges for the time being

Good morning

After testing up to 1.2280 Friday afternoon, GBPUSD has been traded within a 20 pips range pretty much ever since, if anything the range overnight was even narrower. 1.2240 as I type, which is where it was around this time on Friday morning. EURUSD has also been stuck in a range, that has seen a 50 pips range since the Feds rate announcement on Wednesday evening. EURUSD now at 1.0650 puts GBPEUR at 1.1500, it has actually briefly traded below the July lows in the low-1.1490s, touching, we look back to May to see levels below there.

USDJPY continues to fund support after the lack of talk of moving away from negative rates from BoJ last week. In addition the muted market response to recent verbal intervention makes it far more comfortable to hold short yen positions. We do know yen will turn at some point but as with most things in the currency world, timing is the key. GBPJPY finding a bit of support in the mid-181s, CITI technical warn of potential downside in GBPJPY but they also see upside in USDJPY, suggesting it is GBP they see as the worry. They do warn of intervention risks potentially limiting upside USDJPY to the 150 area.

Spot over the weekend threw out some excellent matches. In rugby, England trounced Chile 71-0, I’m still not sure some of those weaker teams should be at the world cup. Wales beat Australia and Scotland beat Tonga, but the match of the tournament was South Africa v Ireland. Ireland came out on top in a close, physical contest. It is difficult seeing any other team getting close to those two. Europe ladies retained the Solheim cup with what looked like at one stage as a highly unlikely draw. Spurs and Arsenal played out a decent 2-2 draw and Sheffield Utd got hammered 8-0 by Newcastle, leaving the three clubs that came up from the Championship all holding the bottom three places in the Premier League.

The most exciting news over the weekend came from space, in the form of samples scooped up from an asteroid in 2020 finally returning safely to earth in a capsule after travelling billions of miles through space. NASA says the sample is likely to contain the first solid materials to form in our solar system. Difficult for us mere mortals to appreciate the importance of this, but NASAS says they will do research on just 25% of the sample, leaving the rest locked away for future generations to work on, with equipment that doesn’t yet exist. A press conference on 11th October will give us an idea of their findings.

It is a quiet start to the week data-wise, but it does pick up as the week goes on. The key at the moment is really whether central banks have reached their peak in rates or whether there is one last 25bps raise lurking around the corner, whether the data out this week makes this any clearer remains to be seen but I’m not holding my breath. This is also the last week before the China golden week holidays, some other Asian markets will also close around early October.

- 09.00 German IFO

- 14.00 ECBs Lagarde speaks

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