Monday 18 March 2024
It's a busy and potentially volatile week ahead as we wait on a host of central bank decisions that starts with the RBA and BOJ tomorrow, continues with the US Fed on Wednesday, then SNB, BOE and Norges Bank on Thursday.
With FOMC in blackout we'll hear nothing from Fed heads until Wednesday's announcement and presser with most bets still on a June rate cut but the conjecture remains around BOJ tightening with JPY failing to rally further as traders run a little cautious after all the recent talk and bets on any tightening move toward April although we may yet see an end to YCC.
Data highlight today is EZ final CPI reading with UK CPI following tomorrow. The Ukraine/Russia war and Middle East Israel/Hamas/Houthi/Hezbollah/Red Sea tensions still cast their own shadow. Identify your preferred levels and let the algos do their thing along with the natural and speculative flows. Don't get greedy or over-analyse.
Equities remain underpinned overall on the firm belief that interest rates will be coming down at some stage soon apart from in Japan and steady this morning after another retreat on Friday amid some profit-taking. WTI has pushed higher again testing $81.50-60 after holding $80.00 again amid the second-guessing on Red Sea/Gaza and global economy. Gold held $2145 this time but capping at $2165-70 still albeit remains underpinned overall on the belief that FOMC will start cutting rates in June.
GBPUSD: Failure around 1.2750-60 on Friday having broken down through amid the general USD demand but holding 1.2725 so far as the tight ranges continue. I remain poised for further re-sells when momentum fades. EURGBP: Ranging ever tightly 0.8545-55 with option interest at 0.8550 today and as the BOE/ECB debates continue. GBPJPY: Holding 189.50-60 then 189.80 this time in the latest retreat and some expected dip support once again helping with rally to 190.20 this morning as JPY conjecture continues with BOJ in focus.
EURUSD: Support around 1.0875-80 still but capping at 1.0900 again so far amid the USD demand and large option contract interest interest today. I remain a rally seller as my preferred side. USDJPY: Capping at 149.30 but holding 148.80-90 once we cleared that hurdle on Friday amid USD demand and markets tiring of lack of moves on BOJ tightening chatter. I remain a rally seller as preferred side overall but still expecting dip demand amid BOJ conjecture/disappointment.
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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