Tuesday 24 May 2022
A little less risk appetite returning but markets second guessing the Cntral Banks in the ever-fickle world of financial markets. Equities are off their highs as is oil but gold nudging higher again on the uncertain backstory. JPY and CHF demand evident now on the crosses afte yesterday's supply and helping to cap core pairs amid the ongoing softer Greenback tones.
Yesterday's comments from Lagarde saying the ECB are likely to be able to end negative interest rates by end of Q3 continues to give the Euro bulls some hope nd a 0.25% hike in July getting factored in. Equally she's said since that they're not on "panic mode" and attentive to level of the Euro. Villeroy has helped cap the rally this morning by saying 0.5% isn't part of the ECB consensus. Whatever way you want to look at it, the jury is still out on the end result but we'll have to wait a little longer for that outcome.
UK Services PMI data just out as I type and a big miss in a sector accounting for more than 80% of UK GDP... GBPUSD falls thru good bids at 1.2550 triggering stops to 1.2515.
As ever, I repeat my view that it's still a case of not over-analysing but keeping your focus on price action in core and cross-pairs. We will continue to trade in ever-fickle markets so the need remains to identify ranges and what levels present value for money. Algos will continue to knee-jerk price action on the variable headlines versus natural flows. Discipline is key as ever.
GBPUSD: Failing to break 1.2600 despite softer USD as EURGBP demand and GBPJPY supply help to cap. Re-sells placed and some pips banked in the fall post-data. I remain poised to sell rallies but timing as ever is crucial.EURGBP: Stalled at 0.8500 after the Lagarde comments rally but now burst through 0.8550 amid general EUR demand and that horrible UK PMI data.GBPJPY: Capped at 161.00 and now down through 159.50 support lines amid the softer risk/swful UK data double whammy.
EURUSD: Found a base into 1.0660 after failing at 1.0700 but now posting 1.0735 highs on the renewed EUR demand.USDJPY: Another hold into 127.10-15 this morning after capping around 128.00 again. Softer risk JPY demand notable. EURJPY: Now capping at 136.75-80 135.00 amid the softer risk tones and EURUSD capping.USDCHF: That line at 0.9700 broken now amid the ongoing USD supply and renewed softer-risk CHF demand. Stop triggered and posting 0.9630 as I type. SNB shadow still lurking despite their recent change in narrative but equally rally sellers poised too still.EURCHF: A line now at 1.0300 for the moment after failure at 1.0335. SNB will be watching and hoping EUR demand continues.
AUDUSD: Now finding a cap at 0.7100 despite softer USD as AUDJPY supply prevails and commodity currencies take a hit. GBPAUD has 1.7650 support area in its sights on the UK data-led GBP fall after failing around 1.7780 again M NZDUSD failed into 0.6500 where we also that option interest yesterday. RBNZ meet tonight with a 0.5% hike forecast so maybe buy rumour sell fact play. Already falling though. GBPNZD tumbling through 1.9400 on the GBP selling but popping up again as I type as GBPUSD finds dip[ demand and NZDUSD tests 0.6425. USDCAD: 1.2760-70 support now amid the softer risk/oil risk providing some CADJPY supply and testing 1.2800 again.
Let's continue to be careful out therEe.
Interbank rates: 08.45 BST
GBPUSD 1.2577
EURUSD 1.0724
EURGBP 0.8520
GBPEUR 1.1730
GBPJPY 160.14
GBPCAD 1.6002
GBPCHF 1.2028
GBPZAR 19.7042
GBPHKD 9.7375
USDJPY 127.30
EURJPY 136.54
EURCHF 1.0319
EURHKD 8.3226
AUDUSD 0.7093
USDCAD 1.2780
USDCHF 0.9614
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