FX Board: Risk appetite rallies, shifting market's focus
- Sterling shines as Brexit fears recede
- Pound gains most evident in GBPJPY
- USDJPY charts reveal bullish signals
- The greenback was more mixed in today's trading as the focus was on a large shift in general market risk sentiment. The only currency able to sustain a notable rally against the greenback, however, was the still-rebounding pound, where a fresh UK poll signalled strong support for the "Remain" faction of the Brexit debate.
- USDJPY has made a partial break of to the upside, so the next session or two is critical for establishing the market regime and where USD strength will manifest most convincingly. Further improvement in risk sentiment would suggest that USD strength should pick up most where the carry implications are strongest, i.e., against the very low- and negative-yielding/QE currencies like JPY, EUR and CHF. See the attached note for more on this.
- Also note that silver is struggling in a key support zone that the bulls will want to remain intact if we're not to fully give up on the silver rally. Gold has more room for further consolidation without yet indicating a full trend reversal.
Create your own charts with SaxoTraderGO click here to learn more
— Edited by Michael McKenna
John J Hardy is head of FX strategy at Saxo Bank