Thursday 26 October 2023
Middle East back-story prevailing again with no sign of ceasefire any time soon and bringing with it some further risk-off sentiment and USD demand both helped by higher US bond yields that's seen USDJPY finally pushing up through 150.00 again having remained underpinned for a while now. A quick knock back down to 149.85 from 150.80 on a little MOF/BOJ reminder but bouncing back, as in other recent interventions. A little bit of USD supply returning elsewhere too as I type.
No CB is bigger than the market and on that note we have the ECB in focus today to deliver their latest policy decision. Markets waiting to see what they have to say on PEPP given that there's already been clear signal for a pause. Yesterday the Bank of Canada kept rates on hold but cautioned that inflation remains higher than expected.
Equities tumbled yesterday amid the risk-off sentiment and looking wobbly still this morning. WTI rallied as equities fell but capping at $85.40 before a retreat to $84.30 amid the uncertain global economic picture too. Gold has found support around $1978 this time but capping at $1991 with natural sellers ever poised still. Geopolitical concerns still very much a threat to market stability with focus on increasing Ukraine/Russia tension and now with the Middle East sadly to the fore.
GBPUSD: Capping at 1.2160 yesterday and finally breaking down through 1.2125 then the strong 1.2080-00 support after the option expiries to post 1.2070 amid the USD demand plus the recent soggy GBP tones too. I remain poised for further entries when momentum fades. EURGBP: Holding 0.8700 and now up to post 0.8735 with GBP looking a little soggy again. Expect more of the same.
GBPJPY: Holding 181.20 this morning amid the USDJPY intervention retreat after capping at 182.20 with sellers ever poised still amid the fragile risk.
EURUSD: 1.0530-35 support being tested this time after capping at 1.0600 amid the USD demand. I remain a rally seller overall.Some options in play. USDJPY: 149.80 the current base with USD-led rallies capping into 150.80 with MOF intervention fears still there plus some JPY risk off demand again too. Some option interest again in play. I remain a rally seller as preferred side overall at these elevated levels but with patience a virtue as ever.
For more detailed analysis across a variety of pairs email mike@mspfx.co.uk
Interbank rates: 08.46 BST
GBPUSD 1.2087
EURUSD 1.0548
EURGBP 0.8726
GBPEUR 1.1458
USDJPY 150.45
GBPJPY 181.83
GBPCAD 1.6684
GBPCHF 1.0862
GBPZAR 23.1350
GBPHKD 9.4181
USDCHF 0.8982
EURCHF 0.9475
EURHKD 8.2196
AUDUSD 0.6308
NZDUSD 0.5800
USDCAD 1.3800
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