Friday 18 August 2023
We've seen further weakness in equity markets and general risk-off appetite as markets remain concerned about the Chinese/global economy.Some USD supply returning helped by US bond yields off their highs and JPY demand helping to cap core pairs via the crosses. BOJ/MOF intervention fears weighing on USDJPY and JPY crosses too still.
UK retail sales data came in weaker than expected and back in negative territory which doesn't surprise me and with downward revision from previous month and has helped cap GBP along with the GBPJPY supply. Not much else on the data/talking heads slate today.
Equities are trading on or near their lows as I type after another strong retreat in NY with dip buyers/bulls now comingh second amid the fragile tones while WTI has found a base this time at $79.00 then $79.50 but capping at $80.50 as the uncertainty continues. Gold finding support around $1885 this time but capping around $1895 amid the general commodity/metals weakness as the jury remains out and tight ranges prevail. Geopolitical concerns still very much a threat to market stability with focus on Ukraine/Russia but also tension in the Middle East among other areas of conflict.
GBPUSD: Capping at 1.2790 yesterday and now testing 1.2700-10 again amid the GBPJPY selling and now soggy retail sales data. EURGBP off its lows also helping. I remain bearish on the UK and GBP overall. EURGBP: Finding a cap at 0.8550-60 again after holding below 0.8520 in yesterday's extended retreat before the renewed GBP supply. More two-way expected overall as core pairs make their mind up. GBPJPY: Capping at 186.50 and falling to test 184.50 amid the risk-off supply enhanced by the USDJPY retreat but some dip demand coming in as I type.
EURUSD: Holding support at 1.0850-60 again but capping at 1.0900 again with decent option interest today at both ends. I prefer the rally-sell side still. USDJPY: Holding the old 145.00-20 support area in the retreat from 146.25 amid the softer USD and risk double whammy. I remain a rally seller as preferred side overall but with patience a virtue as ever. Equally dip buyers should continue to find some results but up here I still regard the risk being to the downside.
More detailed analysis across a variety of pairs from mike@mspfx.co.uk
Let's continue to be careful out there.
Interbank rates: 08.46 BST
GBPUSD 1.2721
EURUSD 1.0878
EURGBP 0.8550
GBPEUR 1.1695
USDJPY 145.33
GBPJPY 184.84
GBPCAD 1.7225
GBPCHF 1.1196
GBPZAR 24.2556
GBPHKD 9.9088
USDCHF 0.8796
EURCHF 0.9565
EURHKD 8.4692
AUDUSD 0.6408
NZDUSD 0.5935
USDCAD 1.3541
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