Thursday 21 December 2023
Given the year we've had, and continue to experience, markets are looking a little tired as we head into year-end with equity markets retreating albeit from exceptional highs and US bond yields falling again. That's brought about some JPY risk-off demand again as the CB second-guessing continues with higher Japanese CPI forecasts in the mix now, helping to cap core pairs despite USD supply overall.
Month-end rebalancing models indicate a strong dollar selling signal by month-end against all majors but still weaker than last month. Ukraine/Russia war and the Red Sea disruptions not going to help keep inflation on the back foot while The ongoing Middle East Israel/Hamas back-story sadly continues meanwhile and casts its own shadow over markets but still not driving prices.
Equities fell in NY trading but basing in Asia and early European trading with the jury still out on the speed of cuts by FOMC et al and some further profit-taking. WTI has capped at $75.40 this time as sellers remain poised amid global demand concerns but holding $73.50 again amid the ongoing Red Sea interruption concerns. Gold has based at $2025 this time and still underpinned but capping at $2040 as we continue to range tightly amid the US rate cut speculation.
GBPUSD: Capping at 1.2680 yesterday but holding 1.2610 in this morning's extended retreat amid the renewed GBPJPY supply. Some good jobbing opportunities again. I remain poised for further rally sells when momentum fades. EURGBP: Two-way business again amid the BOE/ECB rate cut speculation but a further rally before capping at 0.8680 this time after holding 0.8650 amid some general GBP supply as the BOE/ECB jury remains out. GBPJPY: Capping at 182.40 amid the general JPY demand and the GBP selling forcing a further sharp retreat before holding 180.40. Rally sellers remain poised.
EURUSD: Support at 1.0930 in the latest retreats after capping into 1.0960 amid all the CB conjecture and cross flows. I remain a rally seller overall. USDJPY: Finding support at 142.80 this morning after yesterday's cap at 143.80 and subsequent retreat and I hope my steer continues to help. I remain a rally seller as preferred side overall at these still elevated (albeit slightly more balanced) levels.
For more detailed analysis across a variety of pairs email mike@mspfx.co.uk
Interbank rates: 08.47 GMT
GBPUSD 1.2621
EURUSD 1.0941
EURGBP 0.8667
GBPEUR 1.1538
USDJPY 143.25
GBPJPY 180.77
GBPCAD 1.6835
GBPCHF 1.0884
GBPZAR 23.0800
GBPHKD 9.8309
USDCHF 0.8627
EURCHF 0.9438
EURHKD 8.5190
AUDUSD 0.6743
NZDUSD 0.6247
USDCAD 1.3342
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