Thursday 25 January 2024
Yesterday the Bank of Canada left interest rates on hold as widely expected with mixed messages in the rhetoric but the lack of direct tilt toward cutting rates in the near future has weakened the CAD as markets fear any delay will only exacerbate the currently very fragile economic picture. Today sees what the ECB have to say on their own dilemmas and once again, with rates expected to be kept on hold, it will be all about the rhetoric and presser.
FX currency pairs still in second-guessing mode overall and ranging with mixed USD tones. Meanwhile the Ukraine/Russia war and Middle East Israel/Hamas/Houthi/Red Sea tensions still cast their own shadow. Data just out shows German IFO sentiment softer than expectations but no great surprise but apart from the ECB markets will be keenly awaiting US GDP and Durable Goods.
Equities remain underpinned overall still but off their highs amid a bit of profit-taking. WTI currently on the rise and testing month highs of $76.30 after holding $74.00 then $75.00 yesterday with sellers poised still but Red Sea concerns, and technicals offering the greasy stuff some decent support. Gold now capping at the $2015-20 support line after another failure above $2035 then $2025 but support expected into $2000 as we continue to range tightly.
GBPUSD: Holding 1.2700 yesterday but capping into the old 1.2780 resistance only to hold 1.2700 again this morning amid the ongoing range trading. I remain poised for further sells when momentum fades but patience still required. EURGBP: Capping around 0.8565 again but holding 0.8535 in the extended retreat as the CB jury remains out with ECB in immediate focus.
GBPJPY: Capping this time into 188.20 but a hold of 187.20 amid the core pair and risk fluctuations. We can expect rally sellers to remain poised amid all the uncertainty in these ever fickle markets but still seeing some decent dip demand for the moment.
EURUSD: Support coming in at 1.0870 for the moment after the extended run higher but failure into the old 1.0930 resistance area. I remain a rally seller but ECB in focus so some caution required. USDJPY: Capping around 147.50-60 yesterday and we retreated into 146.50-60 amid the USD supply/JPY demand double whammy. Decent bounce since to 147.85 and I remain a rally seller as preferred side overall.
For more detailed analysis across a larger number of FX pairs email mike@mspfx.co.uk
Interbank rates: 08.42 GMT
GBPUSD 1.2728
EURUSD 1.0898
EURGBP 0.8561
GBPEUR 1.1679
USDJPY 147.67
GBPJPY 187.98
GBPCAD 1.7172
GBPCHF 1.0985
GBPZAR 24.0082
GBPHKD 9.9088
USDCHF 0.8629
EURCHF 0.9405
EURHKD 8.4836
AUDUSD 0.6580
NZDUSD 0.6118
USDCAD 1.3519
Comments