Seeing the FX forest for the haze of festive season trees

The main piece of news overnight was all out of the US and related to a deal supposedly being struck so as to avoid another debt ceiling debacle. The deadline looms large at January 15th presently and for now there seems to be an accord or at the very least a framework on which voting may occur so as to avoid more nonsense of the variety we witnessed a couple of months ago. Otherwise Asian bourses all fared quite poorly overnight and Antipodean currencies predominantly the AUD was also taken a peg lower as data from Australia came in softer than street expectations had it pegged at.

In all fairness though little if any real follow through thus far in the European morning as the theme of book squaring and hand sitting continues to be the main driver. Mentioning that we have an FOMC meeting next week seems like the obvious thing to do, but for someone that writes a daily piece, there’s only so many times you can remind the audience of the blatantly obvious.

The Cable has taken a slip lower this morning, driven in large part by the EURGBP pushing higher and exacerbating those looking to sell the cross. With support in GBPUSD at 1.6380 being breached and some tiny stops triggered, the path lower into 1.6330 looks like the way forward albeit a grind to get it done today. On the flipside the EURGBP has motored/chewed through reputed offers into 0.8400/05 and now looks set to test resistance at the 0.8420/30 area. A fade on the day there with a relatively tight stop into 0.8450 could see a decent risk reward into 0.8380 targets on the downside.

The AUDUSD is still stuck between a rock and a hard place and talking to contacts this morning just shows why we have a market at all. There is almost an equal amount of punters out there on either side of the long/short fence to explain why the cross isn’t really moving. Some stops are touted just sub the 0.9000 handle with buyers looking to emerge into 0.9080/65. On the topside the 0.9150 area has held well on the last few attempts and once again acts as a noted sell zone.

Your scribe is taking a step back from the market for the moment simply as he can’t seem to see the forest for the trees, be it a festive induced haze or simply a market that has nothing to say for itself…

Helmets on and good luck out there.

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