Tuesday 2 January 2024
Hello dear readers and I trust you had an enjoyable holiday period.
We duly saw some more month-end USD selling amid a relatively quiet post-Xmas period amid the ongoing geopolitical uncertainty and the awful earthquake news from Japan. The Ukraine/Russia war and the Red Sea disruptions/fallout continue to accelerate while the ongoing Middle East Israel/Hamas back-story casts its own shadow over markets and traders are still second-guessing the rate/extent of CB interest rate cuts in the months ahead too.
We've seen some Yen supply in the immediate aftermath/uncertainty of the Japanese fallout but last time a similar tragedy happened in 2011 we saw JPY strength amid a repatriation of funds as the rebuilding progressed so we'll keep an eye on that. A notable gainer has been the Swiss Franc with CHF appreciating by 3.5% in the last two weeks of December due to a further reduction in CHF shorts amid the expected CB divergence this year. Some general USD demand returning this morning as I type.
Despite all the uncertainty and some rise in bond yields we've not seen much negative reaction in risk sentiment (only a matter of time surely) and equities have rallied after some profit-taking with the jury still out on the speed of cuts by FOMC et al. WTI sellers remain poised amid global demand concerns and capped at $76.00 then $74.00 but holding $71.00 and now back above $73.00 amid the ongoing Red Sea interruption concerns. Gold has based at $2050 this time and still underpinned but failing into $2100 for the moment amid some profit-taking and better risk tones.
GBPUSD: Capping into 1.2820 then 1.2780 into year-end after the month-end USD supply-led support but holding 1.2700 so far in the retreat as we move gently into 2024. Yes folks! No surprise to tell you I remain poised for further rally sells when momentum fades but caution still required as we range tightly. EURGBP: Two-way business still amid the BOE/ECB rate cut speculation holding 0.8650 again in the retreat this morning after capping at 0.8700-10. GBPJPY: Capping at 182.00 last week but finding some decent support at 179.00 so far. Rally sellers remain poised.
EURUSD: Support at 1.1015 in the latest retreats after a rally last week to 1.1140 amid the USD supply but jury out still amid all the CB conjecture and cross flows. I remain a rally seller overall. USDJPY: Finding support at 140.25 last week then 140.75 in the last 24 hours after capping at 142.00 but on the rise through 141.40 as I type. I remain a rally seller as preferred side overall.
For more detailed analysis across a variety of pairs email mike@mspfx.co.uk
Interbank rates: 08.35 GMT
GBPUSD 1.2750
EURUSD 1.1030
EURGBP 0.8650
GBPEUR 1.1558
USDJPY 141.48
GBPJPY 180.41
GBPCAD 1.6854
GBPCHF 1.0760
GBPZAR 23.3014
GBPHKD 9.9166
USDCHF 0.8445
EURCHF 0.9316
EURHKD 8.5798
AUDUSD 0.6826
NZDUSD 0.6301
USDCAD 1.3242
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