Thursday 1 February 2024
Yesterday the US Federal Reserve left rates on hold as expected and the rhetoric left markets guessing again with the initial statement on the hawkish/cautious side and although Powell suggested the door was still open to rate cuts we've seen some USD demand overall but USDJPY in retreat amid JPY demand prevailing on the uncertainty. Today we can expect similar mixed/cautious messages from the BOE policy decision at 12.00 GMT and presser at 12.30 GMT.
This morning's EZ PMI expectations have come in a little better than expected but nothing to change the market's dovish ECB outlook. The Ukraine/Russia war and Middle East Israel/Hamas/Houthi/Red Sea tensions still casting their own shadow and providing some risk appetite fragility. Today's data highlights will be US weekly jobs claims and ISM Manufacturing. Bigger fish to fry tomorrow with the key US Non Farm Payrolls.
Equities remain underpinned despite retreating again post-FOMC but off their lows and relatively steady as I type. WTI has dropped back from $77.50 this time with sellers poised still but holding $75.50 so far with Red Sea concerns, and technicals offering some decent support still. Gold finding some buyers again on the uncertainty to post $2055 and holding $2035-40 as we continue to range tightly.
GBPUSD: Testing 1.2640 again this morning after capping into 1.2750 in yesterday's extended rally pre-FOMC. I remain poised for further sells when momentum fades while we continue to range. BOE in focus. EURGBP: Holding 0.8520 again after capping at 0.8550 yesterday and still looking soft overall with bets on BOE holding interest rates for longer than ECB. BOE expected to confirm that today. GBPJPY: Capping at 187.50 again yesterday and testing 185.50 this time amid fragile risk conditions and the general JPY demand.
EURUSD: Support at 1.0780 in the retreat this morning after capping at 1.0880 amid USD demand post-FOMC. I remain a rally seller. USDJPY:Holding 146.00 then capping at 147.40 before holding 146.50 in the retreats amid the post-FOMC fun and games and I remain a rally seller as preferred side overall.
For more detailed analysis across a larger number of FX pairs including market order flows and options expiries email mike@mspfx.co.uk
Interbank rates: 08.48 GMT
GBPUSD 1.2650
EURUSD 1.0791
EURGBP 0.8525
GBPEUR 1.1722
USDJPY 146.61
GBPJPY 185.48
GBPCAD 1.7007
GBPCHF 1.0920
GBPZAR 23.6288
GBPHKD 9.8543
USDCHF 0.8627
EURCHF 0.9310
EURHKD 8.4067
AUDUSD 0.6525
NZDUSD 0.6093
USDCAD 1.3448
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