Wednesday 8 March 2023
It was the widely anticipated event of the week and US Fed Chairman Powell didn't disappoint the hawks in Part 1 of his semi-annual testimony yesterday. Warning of tight labour markets, strong data, inflationary pressures (albeit all info we already knew) and not ruling out 50 bps hikes was enough in these highly fickle times to create some further USD demand and equity market wobble.
Today sees Part 2 of Powell's testimony and it's unlikely he'll change his position much although we must assume nothing, as always. Some EU data and speeches in forums from ECB's Lagarde and Panetta. RBA's Lowe was once again on the dovish side after the 0.25bps hike and statement. Next CB off the block is the BOC today with BOJ and US NFP data on Friday.
Equities fell on the immediate Powell aftermath but up and down since amid the ongoing fickle market sentiment while WTI duly capped into $81.00 and fallen to $77.00 so far as risk tones soften. Gold has found support at $1800-10 again after breaking down through $1840 having capped into $1860 as the tight ranges continue amid the global uncertainty. Ukraine/Russia war continues to be the main geo-political elephant in the room. US/China tensions in the mix too.
Remember, focus on the price action and let the algos do the heavy lifting/dropping. The important thing is to identify your preferred risk/reward entry/exit levels prior and be poised to execute.
GBPUSD: Duly capping into 1.2000 after the early hold of 1.1975 and then the larger fall post-Powell which has posted lows of 1.1810 not seen since Jan and now capping into 1.1850 with some re-sells duly placed again. I remain a rally seller but some caution still required at these lower levels. Decent option interest potentially in play today.EURGBP: Duly capped into 0.8930 per my tweet in yesterday's extended rally as EURUSD broke down through 1.0580 but support/bids now building 0.8880-00. Expect some more two-way trading as core pairs fluctuate. GBPJPY: A support line now at 162.00-20 but sellers prevailing this time into 163.00 as the uncertainty/fickle sentiment continues and JPY demand prevails on the crosses.
EURUSD: Holding 1.0525 after the breakdown through 1.0560-80 amid the USD demand but capping into 1.0750-60 since where we also have decent option interest today. USDJPY: A reluctant rally to begin with post-Powell as JPY risk-off demand helped temper gains but a solid hold of 137.00 eventualy led to a Cap around 137.90.Poised to re-sell still when momentum fades as I continue to favour being long JPY on the crosses too overall.
More detailed report available at mike@mspfx.co.uk
Interbank rates: 08.45 GMT
GBPUSD 1.1830
EURUSD 1.0535
EURGBP 0.8907
GBPEUR 1.1227
USDJPY 137.63
GBPJPY 162.83
GBPCAD 1.6267
GBPCHF 1.1153
GBPZAR 22.0250
GBPHKD 9.2155
EURCHF 0.9936
EURHKD 8.2084
AUDUSD 0.6600
NZDUSD 0.6114
USDCAD 1.3755
USDCHF 0.9430
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