Monday 4 March 2024
More chatter out of Japan re potential BOJ tightening on a potential end to deflation saw USDJPY drop back below 150.00 yet again in Asian trading but equally we've seen a decent bounce back given the news was fairly much in line with perceived expectations from the market. Week GDP data from Oz saw AUD knocked a little lower. Oil gapped higher on weekend reports that OPEC+ was extending output cuts to the end of June.
So we start yet another week in second-guessing/ranging mode. CB decisions this week from the BOC on Wednesday and ECB on Thursday. Also on Wednesday/Thursday brings Fed's Powell giving his Semi-Annual Mon Pol testimony to US lawmakers. UK Spring Budget on Wednesday too. The Ukraine/Russia war and Middle East Israel/Hamas/Houthi/Hezbollah/Red Sea tensions are all still casting their own shadow so while all the uncertainty remains, both economical and geopolitical, remember to identify your preferred and let the algos do their thing along with the natural and speculative flows. Don't get greedy or over-analyse.
Equities duly remain underpinned overall with fresh record highs being seen in various regions including US and Japan on the firm belief that interest rates will be coming down at some stage and seemingly ignoring ecomomic slowdown and geo-political fragility. WTI testing $80.50 in a rush this morning after holding $78.00 with support coming from the OPEC+ news and still underpinned around $79.00 albeit capping at $80.00 this morning as the second-guessing on Red Sea/Gaza and global economy continues. Gold has posted 1-month highs around $2088 after a technical resistance break of $2045-50 and now holding $2075-80 in the retreat. Maybe it's in the shiny stuff where we're seeing some safe haven plays.
GBPUSD: Failure around 1.2680 yet again this morning but holding 1.2650-60 in the retreats now. I remain poised for further sells when momentum fades as we continue to range overall. EURGBP: Basing around 0.8550-55 and capping at 0.8570 still as the BOE/ECB debates continues. GBPJPY: Testing 190.60 this morning after a hold of 189.80 as the risk and JPY juries remain out but underpinned still for the moment.
EURUSD: Support around 1.0830 again yesterday but failing into 1.0860. I remain a rally seller. ECB looming on Thursday. USDJPY: Capping at 150.40 this morning after the bounce back from 149.80 amid the BOJ comments. I remain a rally seller as preferred side overall given that the BOJ still don't want this racing away too far.
Traders - For more detailed analysis across a larger number of FX pairs including market order flows and options expiries email mike@mspfx.co.uk
Interbank rates: 08.40 GMT
GBPUSD 1.2670
EURUSD 1.0845
EURGBP 0.8558
GBPEUR 1.1682
USDJPY 150.34
GBPJPY 190.50
GBPCAD 1.7180
GBPCHF 1.1182
GBPZAR 24.1039
GBPHKD 9.8698
USDCHF 0.8820
EURCHF 0.9565
EURHKD 8.4503
AUDUSD 0.6516
NZDUSD 0.6092
USDCAD 1.3568
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