JPY demand notable

Thursday 29 February 2024

Some general USD supply again as we head into the last day of the month with signals pointing to moderate outflows as I've highlighted this week. Last London 4pm fix today might see some action as certain trades must be done on the last day but generally most is done in the lead-up. Notable JPY demand again after BOJ's Takata made a few comments pointing to policy tightening giving JGB bond yields a push higher and Yen buying across the board.

US Core PCE in focus today at 13.30 GMT and we have the Fed's Bostic, Goolsbee, and Mester set to speak. The Ukraine/Russia war and Middle East Israel/Hamas/Houthi/Hezbollah/Red Sea tensions are all still casting their own shadow so while all the uncertainty remains, both economical and geopolitical, remember to identify your preferred risk reward levels and let the algos do their thing along with the natural and speculative flows. Don't get greedy or over-analyse. These are tight ranges and will produce regular jobbing opportunities therefore while the jury remains out.

Equities are in retreat again after an early-Asia rally but should remain underpinned overall albeit still with the threat of some correction. WTI capping at $78.50 and testing $77.70 this time as the second-guessing on Red Sea/Gaza and global economy continues. Gold capping into $2038 this time after holding $2033 as we continue to range tightly.

GBPUSD: Failure around 1.2675 helped by the GBPJPY supply but holding 1.2650 in the retreat amid some USD supply. I remain poised for further sells when momentum fades as we continue to range overall. EURGBP: Basing around 0.8550 again and now up through 0.8560 once more as the BOE/ECB debates continues. GBPJPY: Testing 189.30-40 this morning after capping into 191.00 again then 190.50 amid the JPY demand on Takata's comments

EURUSD: Support below 1.0800 yesterday and now above 1.0830 amid the USD supply but sellers around 1.0850 still. I remain a rally seller. USDJPY: Capping around 150.80 yet again so I hope the steer has helped and testing 149.60 on the Takata comment/USD supply double-whammy. I remain a rally seller as preferred side overall given that the BOJ still don't want this racing away too far.

Traders - 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    1.2669

EURUSD    1.0846

EURGBP    0.8560

GBPEUR    1.1680

USDJPY    149.75

GBPJPY    189.75

GBPCAD    1.7192

GBPCHF    1.1118

GBPZAR    24.2887

GBPHKD    9.8621

USDCHF    0.8782

EURCHF    0.9527

EURHKD    8.4435

AUDUSD    0.6505

NZDUSD    0.6092

USDCAD    1.3582