Light and summery flows continue with GBP in purely technical moves.
Very little to update on the fundamental here; a weak macro and political picture persists as activity remains incredibly low in the absence of confidence. There’s a lot of support stacked on the 0.90 🔑 in EURGBP and 1.252x in GBPUSD . Reassessment only required with a weekly closing below/above.
=> Restraint in the technical sense can be conceived with the presence of resistance; but real total defence which reigns over the whole G10 board and which gives FX markets breathing difficulties, is only possible when risk is in the air. Parking in USD will remain attractive as long as the VIX remains elevated.
=> From a risk perspective, to what extent, we may now ask, does one need to give their stop breathing room? It is not enough to state the highs will hold as NFP can easily capture the stops and will be highly unpleasant to defend. This means we need to give some room up towards 1.258x as we will have the 1.25 quarters and halves to protect.
⚡️ US DATA PREVIEW: Primary Dealer Nonfarm Payroll estimates
- RBC 8.0mn - Natwest 7.2mn
- Citi 5.5mn - Morgan Stanley 5.285mn
- BNP Paribas 4.5mn - Goldman Sachs 4.25mn
- HSBC 4.0mn - Scotiabank 4.0mn
- TD 4.0mn - SocGen 3.9mn
- BMO 3.5mn - Wells Fargo 3.3mn
- Credit Suisse 3.0mn - JPMorgan 3.0mn
- BAML 2.8mn - Daiwa 2.5mn
- Deutsche 2.5mn - Mizuho 2.5mn
- Barclays 2.0mn - Jefferies 1.95mn
- Nomura 1.5mn - UBS 1.5mn
- Dealer Median: 3.4mn
With this in mind, 3m is the headline to track.... undershoots will be positive for USD via risk whereas inline or overshoots will trigger profit taking from the recent squeeze. The ST flows in a technical sense are no less imaginative than the MT and LT swing we traded earlier in the year.
As usual thanks for keeping the feedback coming 👍 or 👎
Clearing first targets after reaching 1.243x ... well done bears.