Wednesday 6 September 2023
USD demand prevailing still but off its highs.
With US markets re-opened after Monday's holiday we saw US bonds being sold again and the rising yields have once more created USD demand albeit with some reversal off the highs as we wait to see how European trading opens and then US markets later.
The Japanese Ministry of Finance stepped in with some verbal intervention which helped put a cap on USDJPY after another solid rise to 147.80 but the pair remains underpinned. Today the Bank of Canada are expected to leave interest rates on hold at 5% with little change in rhetoric and not ruling out further hikes if needed. US Fed Beige Book also on the slate.
Equities fell again in US trading hours but stable in Asia albeit on the lows by and large while WTI saw a sharp spike to $87.50 fro $85.00 on news of Saudi supply cuts before retreating off its highs but holding $86.00-20 this morning as I type. Gold finding support around $1925 this time after capping above the previous $1935 lows as the jury remains out and tight ranges prevail. Geopolitical concerns still very much a threat to market stability with focus on increasing Ukraine/Russia tension but also the Middle East among other areas of conflict.
GBPUSD: Capping into 1.2600 after yesterday's retreat into 1.2525 amid the renewed USD demand and now holding 1.2540-50 as a little USD supply returns and risk steadies. I remain bearish on the UK and GBP overall. Some decent options at 1.2500 in play again today providing support. EURGBP: Holding 0.8525 in yesterday's further retreat but still on a back foot as EUYRUSD fails to rally too far with more two-way expected overall as core pairs make their mind up. GBPJPY: Held 184.00 yesterday and a decent rally to 185.80 as USDJPY broke higher despite some softer risk tones generally.Sellers ever poised as risk remains fragile but holding 185.20 so far this morning as core pairs find dip demand.
EURUSD: A hold of 1.0700 yesterdy but capping at 1.0740-50 where we also have large option contract interest today per my warning here yesterday. I remain a rally seller. USDJPY: Holding 146.80-00 yesterday but capping at 147.80 so far this morning amid the MOF verbals and some USD supply generally. I remain a rally seller as preferred side overall with patience a virtue as ever.
More detailed analysis across a variety of pairs and 1-2-1 mentoring sessions for traders from mike@mspfx.co.uk
Interbank rates: 05.47 BST
GBPUSD 1.2568
EURUSD 1.0731
EURGBP 0.8538
GBPEUR 1.1711
USDJPY 147.44
GBPJPY 185.30
GBPCAD 1.7140
GBPCHF 1.1175
GBPZAR 24.0282
GBPHKD 9.7920
USDCHF 0.8887
EURCHF 0.9537
EURHKD 8.3614
AUDUSD 0.6380
NZDUSD 0.5885
USDCAD 1.3643
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