Friday 22 September 2023
Yesterday I warned that a BOE 25bps rate hike was very much in the balance given Tuesday's softer inflation data and so it proved as Bailey & Co voted 5-4 to keep rates on hold. Some cautious tones accompanied via the policy statement but not as hawkish as the Fed and we've seen the Pound under renewed pressure since albeit not in freefall as the jury remains out. The BOJ also kept everything on hold and Governor Ueda disappointed the JPY hawks by keeping his cards close to his chest on any future tightening despite his recent comments which had led a few to think a change was coming this time around. It wasn't and we've seen JPY supply ensue once again.
UK retail sales data this morning showed a good bounce from the soggy weather affected July numbers but slightly below expectations and therefore not pleasing the GBP bulls either. Today's data focus are the keenly observed/algo fodder PMI flash forecasts but I've long moved on from hanging my hat on wet finger in the wind guesses to be honest.
US equities fell in NY but found some dip demand once again in Asia and ranging tightly since in early European trading. WTI once again rallied from $88.40-50 but capped into $91.00 still and now back below $90.00. Gold finding support around $1925-30 still after failing to make headway above $1935 with natural sellers still poised and tight range prevailing. Geopolitical concerns still very much a threat to market stability with focus on increasing Ukraine/Russia tension but also the Middle East among other areas of conflict.
GBPUSD: 1.2300-20 providing the cap into and post BOE decision but holding 1.2230 so far in the retreat with decent option interest in play today and helping to contain range. Keeping core shorts still and I remain poised for further rally re-sells per my tweets too. EURGBP: Holding 0.8660 in retreats post BOE amid the further GBP supply but capping around 0.8690 so far. More two-way expected overall but should remain underpinned for the moment. GBPJPY: Capped at 182.50 yesterday and a rapid retreat into 180.80 amid the GBP supply/softer risk tones and some hawkish BOJ expectationds but a base forming around 181.20 and rally on BOJ policy announcement. Sellers ever poised as I've been warning.
EURUSD: A hold around 1.0620 again this morning but capping into 1.0670 amid the general USD demand. I remain a rally seller overall. USDJPY: A good hold of 147.30-50 in yesterday's BOJ hope/concern for hawkish tones retreat. 148.50 tested again this morning amid the general USD demand and BOJ actual outcome but capping for the moment ongoing fears of MOF/BOJ intervention. I remain a rally seller as preferred side overall at these elevated levels but with patience a virtue as ever.
More detailed analysis across a variety of pairs and 1-2-1 mentoring sessions for traders from mike@mspfx.co.uk
Interbank rates: 08.08 BST
GBPUSD 1.2283
EURUSD 1.0665
EURGBP 0.8681
GBPEUR 1.1520
USDJPY 148.37
GBPJPY 182.26
GBPCAD 1.6490
GBPCHF 1.1088
GBPZAR 23.0487
GBPHKD 9.5427
USDCHF 0.9050
EURCHF 0.9653
EURHKD 8.2836
AUDUSD 0.6428
NZDUSD 0.5943
USDCAD 1.3469
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