Thursday 18 May 2023
The US debt ceiling talks between Biden and Congress remain very much in focus but doing nothing to disturb the demand for USD atm as markets continue to revise their previously bearish stance on US Fed policy and a growing awareness of slower economic activity elsewhere. AUD found itself on the back foot again after the release of a soggy jobs/wages report gives the RBA something more to think about.
Not a lot of data to feed off again today but we do have Lagarde speakng at 06.30 and 09.00 GMT plus BOE's Bailey testifying to UK lawmakers on the sale of bonds in its QE programme at 09.15 GMT. Chief economist Pill also speaking at 08.45 GMT. Later in the day brings a few FOMC talking heads too. A few European centres including France and Germany off to mark Ascension Day.
Equities are steady again as I type but with sellers poised in the rallies amid the fragile economic backstory and Fed tightening talk after another retreat and rise yesterday. WTI also steady after a decent rally through the previous resistance at $71.00 and %71.50 which now become support after a cap at $73.25. Gold tightly bound between $1970-90 amid the Fed tightening talk.Ukraine/Russia war continues to be the main geo-political elephant in the room with ongoing US/China/Taiwan tensions in the mix too The world remains a fragile place for sure.
GBPUSD: Holding 1.2420 yesterday but equally failure above 1.2500 and re-sells duly placed. I remain a rally seller as my preferred side. Pill and Bailey talking this morning. EURGBP: Capping into 0.8690 this time after the retreat from 0.8720 and bounce from 0.8670 as we continue to range.Expect some two-way business still overall as core pair sentiment flutters around. GBPJPY: Basing around 170.50 this time with USDJPY bouncing strongly again in a repeat of its recent pattern with Yen supply notable with Yuan weakness. Rally sellers ever-poised and so far capping moves at 172.00
EURUSD: Support into 1.0800 in yesterday's further retreat amid the USD demand but failure into 1.0850 since as downward pressure continues. I remain a rally seller as my preferred side. Large options in play. USDJPY: Support prevailing at 136.60-80 yesterday and breaking up through 137.25-35 resistance which now becomes support in a repeat of the recent pattern. Capping into 137.80 so far and I still prefer to sell rallies/be long JPY overall but caution/patience still required as I've been warning. Yuan weakness-influenced JPY supply notable despite risk tones being wobbly.
More detailed analysis across a variety of pairs from mike@mspfx.co.uk. Mentoring details there too.
Interbank rates: 06.15 BST
GBPUSD 1.2470
EURUSD 1.0832
EURGBP 0.8686
GBPEUR 1.1511
USDJPY 137.64
GBPJPY 171.62
GBPCAD 1.6797
GBPCHF 1.1209
GBPZAR 24.0451
GBPHKD 9.7142
USDCHF 0.8993
EURCHF 0.9740
EURHKD 8.4390
AUDUSD 0.6646
NZDUSD 0.6257
USDCAD 1.3474
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