Bring on the Central Banks

Monday 29 July 2024

Another busy and volatile week ahead as we see the BOJ, US Fed (Wednesday) and BOE (Thursday) all announcing their latest decisions to a market that has been second-guessing for ages. Slightly higher PCE data brought some USD demand on Friday but equally better risk tones with equities steadying and the subsequent JPY supply lifted USDJPY and underpinned core pairs through the cross flows. Another reversal in Asia has seen USDJPY drop back into 153.00 after another failure between 154.30-50 but some USD demand returning overall as the jury remains out.

While the CB, political and USD second-guessing continues remember as always to identify your preferred risk reward levels and let the algos do their thing along with the natural and speculative flows. Don't get greedy or over-analyse.

US and European equity markets mostly staged a decent recovery on Friday with dip buyers prevailing but with rally sellers/proft takers still poised. WTI opened higher in Asia on renewed Middle East tensions  but capped at $77.40. Support coming in at $76.75-80 so far. Gold found some dip demand into $2370 but with rallies capped by more profit-taking between $2400-10. Dip demand should remain but profit-takers/sellers still poised.

GBPUSD:  Capping above 1.2885 in Asia with GBPJPY helping once again along with some general USD demand and now testing 1.2830 in a rush as I type. Some chatter again about a BOE rate cut on Thursday. EURGBP: Holding 0.8425-30 and testing 0.8450 this morning amid the GBP supply. V large option interest tomorrow at 0.8450. GBPJPY:  Support below 197.00 this morning in the rapid retreat before USDJPY found some dip demand but the GBP supply keeping a lid on things at 197.80-00.

EURUSD: Guess what? Yep, still trading 1.0830-70 as we continue to range tightly amid variable cross and USD flows. USDJPY: Strong support now into 153.00 it would appear and a steady rally to 153.84 as I type as the two-way business continues after another drop from 154.40. MOF/BOJ fears will remain and BOJ rate hike conjecture all in the mix still. Entry level/patience is key as always as shown by recent volatility.

Traders - For more detailed analysis across a larger number of FX pairs including market order flows and options expiries email mike@mspfx.co.uk

Let's continue to be careful out there.

Interbank rates: 08.28 BST

GBPUSD    1.2850

EURUSD    1.0851

EURGBP    0.8444

GBPEUR    1.1841

USDJPY    153.55

GBPJPY    197.30

GBPCHF    1.1334

GBPZAR    23.5228

GBPHKD    9.9946

USDCHF    0.8843

EURCHF    0.9595

EURHKD    8.4413

AUDUSD    0.6547

NZDUSD    0.5882

USDCAD    1.3834