Tuesday 16 July 2024
Yesterday's speech from US Fed Chair Powell offered little that markets didn't already know by repeating some upbeat comments on the economy and defeating inflation but with understandable tones of caution too. We did see some USD demand return led mainly by the expectation of Trump returning to the White House and his manifesto of reducing regulations and cutting taxes. US bond yields rose helping to underpin the Greenback as did the better than expected Empire State Manufacturing Index but all ranging tightly again for the moment. Some JPY supply notable again.
US Retail Sales and Canadian CPI on the data front today. Casting its own shadow is the latest ECB rate decision/statement on Thursday but no cuts expected before August/September.
US equity markets remain underpinned amid good two-way business but we have seen another retreat in European markets this morning amid the many variables and proft-taking. WTI has fallen again amid Trump's plans to open up more drilling sites and now testing $80.30 after capping at $81.30-50 this time. Ever fickle for the moment and expected to range still. Gold has found a few buyers again after holding $2420 but capping at $2440 so far.
GBPUSD: Support coming in at 1.2950-60 again helped by GBPJPY demand after capping at 1.2990 amid the USD demand returning. More two-way expected as the USD jury remains out. EURGBP: Continuing to range at the lower end of recent moves holding 0.8398 so far but a cap into 0.8410 this time. ECB/BOE rate cut conjecture also in play still. GBPJPY: Another rapid retreat yesterday as Powell began his speech but a hold of 204.00-10 again and a solid rally to 205.80 as USDJPY found dip demand and JPY supply returned. Sellers will remain poised but dip buyers will also think there's some value too.
EURUSD: Holding 1.0880 helped by EURJPY demand after capping at 1.0922 amid the variable USD tones of the past 24 hours. Large option contract interest around 1.0900 again today should help contain but seems underpinned in current scenario. USDJPY: Support coming in around 157.00 yesterday in a rapid retreat from 158.00 as Powell's speech began but failing into 158.80 in the USD demand-led rally so far. MOF/BOJ intervention fears remain.
Traders - For more detailed analysis across a larger number of FX pairs including market order flows and options expiries email mike@mspfx.co.uk
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