Thursday 9 May 2024
Will they ? Won't they ? If not now/June then when? The second-guessing continues as we wait on the latest interest rate policy decision from the BOE MPC at 11.00 GMT with Bailey presser at 11.30 GMT. No action expected today but there's been some pricing in of a June cut brought forward from August/September so risk will be to the hawkish side. As ever inflation and other data will be key in current and future MPC deliberations so expect Bailey & Co to remain cautious. Keep an eye as always on the vote, expected to be 8-1.
Meanwhile we've seen the general USD demand continue with a further rally in USDJPY and JPY supply still notable on the crosses too amid more verbal posturing from Suzuki and Ueda but no fresh interevention. Yesterday the Riksbank duly cut rates by 25bps as widely expected with an intention of two more to come before end-2024. Cue some SEK selling understandably but with much of it already factored in we've settled a little since.
The Ukraine/Russia war and Middle East tensions sadly still cast their own very large shadow too. Don't get greedy or over-analyse. These are tight ranges and will produce regular jobbing opportunities therefore while the jury remains out.
Equities have traded tightly again in the past 24 hours in the wake of little new impetus and the second-guessing while WTI held $76.75 yesterday in the extended retreat and now back up through $79.20 amid the ongoing variables. Gold has capped at $2320 with profit-taking again evident but still underpinned at $2300-10 for the moment.
GBPUSD: Failing around 1.2500-10 yesterday and a retreat amid the USD demand but holding 1.2470 in retreats since with falls tempered by some GBPJPY demand yet again. I remain a seller while we continue to range overall. Cross flows very much in play still. BOE in focus. EURGBP: Capping above 0.8615 but holding 0.8595 in the retreat amid position squaring as the ECB/BOE rate cut conjecture and cross flows continue. BOE in focus. GBPJPY: Holding 193.80 then 1.9430 in the latest retreats but capping at 194.50 amid USDJPY price action and intervention second-guessing. Sellers will remain poised in these fickle markets but still expecting dip demand too. BOE in play.
EURUSD: Support around 1.0730 this morning after yesterday's cap at 1.0760 again amid the USD demand. I remain a rally seller as my preferred side still but patience a virtue as we range tightly still. USDJPY: Testing 155.85 so far after support coming in at 155.10-20 yesterday on the USD demand and lack of MOF/BOJ action. Intervention risk will still cast its shadow but not until if/when we push back up into the 157-160 area imho.
Traders - For more detailed analysis across a larger number of FX pairs including market order flows and options expiries email mike@mspfx.co.uk
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