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  • Writer's pictureMike Paterson

Bring on the Fed

Wednesday 22 March 2023

We've seen another mixed 24 hours as the jury remains out as it rightly should with the US Fed announcing their latest monetary policy decision today at 18.00 GMT then the SNB and BOE tomorrow. Msrkets are pricing in an 80% chance of a 25bps hike from the FOMC but there'll be plenty of focus on the statement and Chair Powell's presser too amid the inflation control versus fragile banking sector concerns.

This morning some higher inflation data in the UK will give the BOE MPC plenty to think about as their meeting gets underway today with a 98% chance of 25bps hike priced in while the SNB has its banking sector meltdown very much to weigh up against its very vocal determination to keep inflation under control. An interesting 36 hours ahead for sure and we've rightly witnessed some good two-way USD and risk moves as the second-guessing, and some profit-taking, ensue meanwhile.

Equities have enjoyed another decent rally albeit with a few dips along the way as the guessing games and position-trimming continue ahead of the FOMC while WTI has found a base at $68.00 after finally breaking up through that resistance area yesterday but failing to hold above $69.75 as the fragile/fickle risk tones remain. Gold has been in further retreat amid the better risk tones to break down through $1960 but still holding $1930 as I type. Ukraine/Russia war continues to be the main geo-political elephant in the room with ongoing US/China tensions in the mix too. China's Xi and Putin having a love-fest as the fragile global landscape looks ever more concerning with Japan's PM in a surprise visit to Ukraine to support the regime there.

GBPUSD: Holding 1.2180 then 1.2220 yesterday amid some USD supply and better risk GBPJPY demand and testing 1.2285 again as I type with decent offers/resistance at 1.2300-20 still lurking. A few re-sells duly placed again and I remain a rally seller still albeit continuing with some caution into BOE tomorrow. EURGBP: A solid rally yesterday as some EUR demand returned but capping into 0.8840 and now testing support at 0.8780-85 as I type in the wake od the strong UK inflation data. Expect some more two-way trading as core pairs and risk both fluctuate. BOE in focus too. GBPJPY: Support line back in at 161.50 this time amid the better risk tones and JPY supply but failing into 162.75 atm with rally sellers poised as the uncertainty/fickle sentiment continues and core pairs head into reistance areas too.

EURUSD: Holding 1.0750-60 since the break through yesterday and posting 1.0788 as I type. I remain a rally seller as my preferred side but some caution required still. USDJPY: A decent support line forming at 131.80-00 yesterday and now 132.00 amid the better risk JPY supply That decent sell interest between 132.50-60 certainly helped cap a few times before the break-up through to test 132.80. I continue to favour rally sells and being long JPY on the crosses too overall.

More detailed analyis across many more pairs from

Interbank rates: 08.27 GMT GBPUSD 1.2275 EURUSD 1.0776 EURGBP 0.8776 GBPEUR 1.1393 USDJPY 132.52 GBPJPY 162.70

GBPCAD 1.6810

GBPCHF 1.1324

GBPZAR 22.7477

GBPHKD 9.5583 EURCHF 0.9940 AUDUSD 0.6690 NZDUSD 0.6213 USDCAD 1.3706 USDCHF 0.9221

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