Friday 22 December 2023
Yesterday I warned about month-end USD selling and given the limited market hours next week amid the Xmas holidays it seems we've got some kicking in already helped by softer Q3 core US PCE data so we were at least forewarned. JPY demand prevailing amid fragile risk tones and firmer Japanese inflation data. Some correction this morning but expect the trend to continue overall into year-end amid thin liquidity conditions.
This morning has seen weaker than expected UK GDP revisions but negated by higher November Retail Sales albeit driven by Black Friday and early Xmas shopping. The Pound is off its lows having found a bit of dip demand after yesterday's retreat. 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 again then rallied in NY trading but off their highs and steady 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 is testing $74.80 as I type but sellers remain poised amid global demand concerns but holding $73.00 then $73.50 again amid the ongoing Red Sea interruption concerns. Gold has based at $2035 this time and still underpinned but capping at $2055 as we continue to range tightly amid the US rate cut speculation.
A reminder that this will be my last update this year. I'll be taking a break next week and returning 1/2 Jan. May I take this opportunity to thank you for your business and I hope that I've helped give you a good steer. Wishing you all Seasons Greetings and a peaceful and successful 2024.
GBPUSD: Capping into 1.2720 this morning after the USD supply-led rally yesterday and holding 1.2680 but gains tempered by some GBPJPY supply again albeit off its lows as I type. Some re-sells placed above 1.2700 and I remain poised for further rally sells when momentum fades but caution required amid the month-end USD supply flows. EURGBP: Two-way business again amid the BOE/ECB rate cut speculation but a further rally yesterday before capping at 0.8685 this time but holding 0.8650 again in the retreat. GBPJPY: Capping at 181.00 amid the general JPY demand and the GBP selling after holding 179.80. Rally sellers remain poised.
EURUSD: Support at 1.0975 in the latest retreats and a rally through 1.1000 amid the USD supply but capping into the recent 1.1017 highs amid all the CB conjecture and cross flows. I remain a rally seller overall. Options in play again if we retreat.
USDJPY: Finding support at 141.85 this morning but capping at 142.50-60 amid the USD supply/JPY demand double whammy and I hope my steer continues to help. I remain a rally seller as preferred side overall at these still elevated levels.
For more detailed analysis across a variety of pairs email mike@mspfx.co.uk
Interbank rates: 08.43 GMT
GBPUSD 1.2700
EURUSD 1.1001
EURGBP 0.8665
GBPEUR 1.1541
USDJPY 142.16
GBPJPY 180.48
GBPCAD 1.6840
GBPCHF 1.0857
GBPZAR 23.3433
GBPHKD 9.8851
USDCHF 0.8557
EURCHF 0.9421
EURHKD 8.5737
AUDUSD 0.6789
NZDUSD 0.6281
USDCAD 1.3275
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