Friday 5 May 2023
Yesterday the ECB duly implemented a 25bps rate hike as widely expected and said that it was not ready to pause any time soon but the hawks were looking for a bit more and with most of yesterday's move already factored in we've seen some Euro selling return. Analysts still looking for 2-3 more hikes of 25bps overall though.
USD supply notable yesterday with USDJPY leading the way again intially but also seen GBPUSD jump above 1.2600 and AUDUSD back testing 0.6750 as the RBA repeats its not ruling out further hikes. Some USD demand returning this morning but today markets and algos will focus on the latest US jobs and wages NFP data at 12.30 GMT. Outcome of the local elections in UK won't be fully known until later today but the current dismal showing by the governing Tories was widely expected.
Equities are off their lows this morning again yet again after yesterday's slide as per recent pattern while WTI still looks soggy and now capping around $69.50 again after a hold of $67.50 this time as the recesssion fear-led continues. Gold pushed back up to $2060 in yesterday's risk wobble but now popped back down to $2040 as natural sellers take advantage once again nd equities/oil steady. Ukraine/Russia war continues to be the main geo-political elephant in the room ramped up now by drone attacks on the Kremlin with ongoing US/China/Taiwan tensions in the mix too and now ongoing Middle East tensions and turmoil in Sudan continuing.
GBPUSD: A good hold of 1.2550 yesterday amid the general USD supply and helped by the EURGBP slide post-ECB and a strong rally but capping at 1.2635 so far helped by some USD demand returning in Asia. Some re-sells duly placed and I remain a rally-seller on this pair overall. BOE decision next Thursday casting a shadow. EURGBP: Capping into 0.8780-00 after the break-down post ECB but holding 0.8740 so far albeit with rallies capping ever-lower since.Expect more two-way business still overall. GBPJPY: Capping around 169.50 and falling to 168.00 amid yesterday's risk wobble and extended USDJPY retreat. Sellers prevailing at 169.40 this morning as risk remains fragile overall.
EURUSD: Holding the old 1.0980 support area after initially finding support at 1.1000 helped by the option interest after capping at 1.1080 post-ECB. Some pips banked in the retreat and I remain a rally seller as my preferred side overall. Ranging still overall though. Large options lurking. USDJPY: Another USDJPY retreat to ultimately test the strong support at 133.50 where I warned bids were building yesterday in the orderboard and pips gratefully banked from the re-sells after failing above 134.80 and eventually breaking down through the initial 134.30-50 floor.
More detailed analysis across a variety of pairs from mike@mspfx.co.uk
Let's continue to be careful out there. Interbank rates: 08.35 BST GBPUSD 1.2620 EURUSD 1.1040 EURGBP 0.8750 GBPEUR 1.1428 USDJPY 134.10 GBPJPY 169.07 GBPCAD 1.6909 GBPCHF 1.1240 GBPZAR 23.1480 GBPHKD 9.8154 USDCHF 0.8887 EURCHF 0.9806 EURHKD 8.5874 AUDUSD 0.6733 NZDUSD 0.6300 USDCAD 1.3500
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