Daily FX Wrap: GBP catches a firm bid, led by large GBP/JPY order. USD strength fading a little, but dip buyers lurking.
A quiet day for news and events, but relatively busy in terms of FX price action. The big mover on the day was GBP, with a sharp rally instigated by a large buy order in GBP/JPY from 137.00, which took out a series of stops from 137.25-65 and eventually went on to hit highs just shy of 138.60. These levels were last seen in early Sep, with the next key level just above 143.00 from mid July. The move saw Cable holding 1.2300 again, generating a rally up to and through 1.2500, but strong resistance seen 50 ticks north of this level.
EUR/GBP was hit down to .8500 accordingly, but all moves order driven as the rhetoric from PM May at the CBI was motivational at best, calling for the best deal for the UK again, but we also heard from the Swiss president who said he was open to discussions on the UK joining the FTA. Back o the main theme of the moment, and USD strength looks to be correcting a little, with EUR/USD now back above 1.0600 and USD/CAD pushing through the recent 1.3400 base as oil prices nudge higher.
The former is largely down to overextended levels, with sellers deterred by stronger supported cited in the lower half of the 1.0500’s, while USD/CAD resistance ahead of 1.3600 has encouraged CAD buyers to ‘go with’ the correlation with WTI.
AUD/USD is higher in line with this, holding .7300 on the downside to eye a near term move on .7400. NZD/USD is back in the upper .7000’a, but this pair is very much in the background these days and is following the rest of the pack. Finally for USD and cross JPY, higher levels are still threatening, but these steep gains seen in such a short period of time are ripe for a stronger retracement, held up by steady stock markets only. USD/JPY resistance from 111.50-112.50, but dip buyers from 107.00-106.00.