GBPUSD running higher, approaching 1.2300

Can't see an obvious catalyst for this

  • Jutst to make you aware, the GBP is running higher after Johnson's speech, but I can't see an obvious catalyst for this. Will update if I see one.

  • not related to above headline, but German Gov't spokeswoman is on the wires saying EU commission will do everything it can for agreement because time is pressing.



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USDJPY poised for more downside on US manufacturing malaise

USDJPY poised to fall further

After the slowdown in the US shows that it is following the slowdown in Europe we will a renewed pressure on 2-year yields. The USDJPY tends to track the 2-year yield.

The daily USDJPY chart has put in a bearish outside bar rejecting the 100EMA. Expect sellers on retracements with stops above 108.50. USD is a strong sell today as the market comes to term with the US following Asia and Europe with a manufacturing downturn. 

USDJPY



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Currencies in focus: AUD weakest against USD and GBP strongest

USD strong on the day 

USD strong on the day 

This is pretty much what we have seen on the session - AUD and NZD weakness and marginal (very marginal) GBP strength against the dollar as the GBP tries to run with the idea of Boris Johnson having a new plan to submit to the EU.. Selling AUD on rallies looks good, and I flagged AUDUSD likely to find sellers on retracements here. 




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PM Johnson on wires: Not producing proposals now, we will table in Brussels

PM Johnson, via Reuters

  • The difficulty is around the customs union

  • EU and Dublin are not talking about the proposals we are going to present (remember that Coveney comment earlier)

  • We do think there is a good solution

  • UK Gov't has made a considerable offer

  • We are already offering a single territory fir Agriculture and agrifooods

  • What we want to do is get rid of the backstop, 'that's the most important thing'

  • We want changes to the political declaration.

  • No point of doing Brexit if you stay locked into the customs union, and the existing agreement did just that 

  • Thinks we can do this with our European friends and with Dublin in a way that protects Good Friday deal

  • Inevitable that he is going to come under a certain amount of shot and shell.

GBPUSD at 1.2281 on these headlines and not running with them. Optimism is remaining low about a Brexit deal.



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EURUSD cracks to new lows for the year and new low since 2017

Large option expires today

The EURUSD cracked below the 1.0900 area and moved to yet another low for the year. The pair has not traded this low since September 2017. 

Large option expires today


Today their are a large option expire at 10 AM.  At 1.0900 there are 2.3B of option expires and at 1.0875 there is another 1.5B expires. The low on the break of the 1.0900 level scooted down to 1.0884.  The price is back up to 1.0897.  PS The low from last week stalled just above the 1.0900 level at 1.09038.  Falling below that level also weakened the technicals for the pair. 

If there is an large option expire, it behooves those who are short to keep the price near the option level (the option will decay toward 0).  If it moves away from that price, traders who are short a bunch, may be forced to hedge.  Hence the potential for volatility if pushed through a strike price with momentum.  

The move to the downside was also helped today by a move back below the 1.0923-263 area. Those levels were home to lows from September 3 and September 12 (see yellow area on the hourly chart above).  

Last week the price broke below those lows on Thursday briefly but quickly rebounded.   Howver, by the end of the day the price moved below the level. 

On Friday, after the low bottomed at the 1.09038, the price moved back above that key swing area at 1.0923 – 263 and stayed above (see red shaded area). The fall back below today tilted the bias back to the downside. 

Watch the 1.0900 area and the 1.0923-26 area as topside resistance now ((risk for shorrts). Stay below keeps the sellers in control. 



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EURUSD in focus: $2.3bln option at 1.0900

Large Option in play

There is a large option expiry level in play here on the EURUSD pair. 

Large Option in play

See here for option expiry explanation from mighty Mike. 



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GBPUSD sellers target 1.2250 on Saunders dovish comments

1.2250 target

The obvious target here for GBPUSD sellers is 1.2250. Expect sellers on retracements and profit taking at 1.2250.

Is this new? yes

Is this significant? yes

For lessons on sentiment trading see an article I posted here recently. This is a good example of a fresh sentiment shift. 

1.2250 target



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Chart in focus GBP/NZD

GBPNZD

The GBP should be offered today as Boris Johnson takes a strong stance on his do or die Brexit approach. He is neither confirming to abide by the Benn Bill or rule out prorogation of Parliament mach 2

The NZD is supported as the RBNZ rules out unconventional monetary policy after the RBNZ stayed on hold this week. 

I mentioned this outlook up earlier in the session here. If price pulls back on the GBPNZD I expect sellers on pullbacks. The risks to this outlook is if there is any positive GBP Brexit news. which of course is a real risk on the Brexit driven GBP right now.

GBPNZD



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EURUSD falls towards major daily support level

Expect profit takers for shorts 

The EURUSD is falling down towards key daily support marked below. Expect profit takes for short term shorts and a little pop on testing the level. If/when the level gives away watch for stops tripping on the break. 

Expect profit takers for shorts 



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Chart in focus: GBPJPY - JPY supported on risk aversion.

GBPJPY shorts looks attractive

With all the global risk sentiment in the air dragging equities down overnight and this am JPY looks like it could be well supported on the session. 

In contrast, the GBP has now faced the prospect of more uncertainty after Corbyn declined to set a no-confidence vote in Johnson. The no-deal Brexit deadline just moves a little closer, with no action to stop it. 

GBPJPY shorts looks attractive with a pivot point target around 132.73 beneath the 100EMA on the 4 hour chart. 

GBPJPY shorts looks attractive



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