Friday 5 July 2024
We're still seeing some USD supply led by another USDJPY retreat as markets prepare for today's key US NFP jobs/wages data at 12.30 GMT. US markets are technically open but liquidity will be thin given the extended Independence Day celebrations so we should expect some decent volatility should data be wide of the mark. Other figures this week have been mostly bearish but we must never take anything for granted.
Unlike the UK General Election that has duly produced a seismic shift in the political landscape obliterating the two party domination we've seen over decades. Our first past the post electoral system has delivered the Labour landslide as expected but the number of seats now held by the smaller parties including 71 Liberal Democrats is equally notable. With the second lowest ever turnout at 60% with around 34% support for the Party that so far has won a huge majority with 411 seats, and only a handful yet to be declared, shows a nation full of both apathy and anger. The Pound is little changed unexpectedly but focus will now turn to exactly how the new government will manage the economyy.
French elections on the landscape/risk radar this weekend too so while the CB and political second-guessing continues remember as always to identify your preferred risk reward levels and let the algos do their thing along with the natural and speculative flows especially in days like today with thin liquidity.
Equity markets by and large remain underpinned albeit with sellers still lurking as the jury remains out. WTI dip demand still notable but capping at $83.80 in the latest rally after holding $82.60-80. Gold finding a base at $2350-55 this time and pushing up to $2368 as I type before capping. Dip demand should remain but profit-takers/sellers still poised.
GBPUSD: Support coming in around 1.2750 yesterday but failing into 1.2780 again as the jury remains out and new government unknowns not to mention today's NFP data. More two-way expected as we continue to range. EURGBP: Holding 0.8460 but capping into 0.84780 I type. EU and UK politics still casting a shadow along with ECB/BOE rate cut conjecture. GBPJPY: Following USDJPY down then up again once more. Holding 205.00 this time but capping at 2.0560-80. S
EURUSD: Testing 1.0830 as I type after holding 1.0800-10 amid the general USD supply as we continue to range tightly. French election unknowns also in play. USDJPY: Support coming in at 160.50 this time in the US supply retreat after capping yesterday at 161.40. MOF/BOJ intervention fears remain but not putting off dip buyers still.
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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