Friday 10 May 2024
FX markets still ranging as another week closes. Yesterday's US weekly jobs data produced a little USD supply but some dip demand appearing yet again as the jury remains well and truly out. As can be said for yesterday's BOE decision to keep rates on hold as expected but with a 7-2 vote and a dovish Bailey. Initial GBP supply on the headlines and rhetoric but ultimately markets had been pricing that in for a while now so the risk, as I warned, was to the upside and dip buyers duly appeared.
UK GDP this morning came in better than expected but a small GBP knee-jerk higher has been sold into given the flaky road ahead and political uncertainty. BOE's Pill and Dingtra speak today to add to the conjecture but meanwhile we've had more jawboning out of Japan on JPY weakness but no intervention. Data slate today features Canadian jobs/wages and US Michigan Sentiment. The Ukraine/Russia war and Middle East tensions sadly still cast their own very large shadow too.
Equities have rallied steadily in the past 24 hours bringing with it some better risk appetite while WTI held $78.60 yesterday but failing at $79.60 amid the ongoing variables. Gold has rallied steadily too from that $2300-10 base and now up through £2335 resistance to test $2365-70 resistance. Expect profit-taking to continue in the rallies but appetite for the shiny stuff remains.
GBPUSD: Holding around 1.2440 in yesterday's post-BOE retreat with dovish tones factored in and some softer USD tones we saw a steady rally through 1.2525 and then on to 1.2540 this morning post-GDP. Some GBPJPY demand yet again too. Large option contract interest very much in play.EURGBP: Capping above 0.8615 again but still holding 0.8595 in the retreat as the ECB/BOE rate cut conjecture and cross flows continue. GBPJPY: Holding 194.50 on better risk tones and GBP rally but capping at 195.30 amid USDJPY price action and intervention second-guessing. Sellers will remain poised in these fickle markets but still expecting dip demand too.
EURUSD: Support around 1.0760 yesterday but failing at 1.0785 as some USD demand returns. USDJPY: Support coming in at 155.20 again after capping at 155.80 as some USD supply returned and now pushing back up there as I type in a reverse move. Intervention risk will still cast its shadow but not until if/when we push back up into the 157-160 area imho.
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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