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  • Writer's pictureMike Paterson

Bring on US CPI and FOMC

Wednesday 12 June 2024

Some decent two-way business in the past 24 hours but within tight ranges understandably as we wait on the week's main events today. US CPI data and the latest US Fed's FOMC interest rate/policy announcements at 12.30 and 18.00 GMT respectively.

After Friday's strong US NFP report any downside to inflation expectations will certainly re-open hopes of an FOMC cut sooner rather than later (but still not for a while yet) making the recent USD demand somewhat futile but equally stronger than expected data will rubber stamp the case for the hawks. Either way we'll find out what the FOMC think later and as always it will be the presser where Powell will try and guide markets for future intentions.

We've seen some Euro fragility again amid reports/rumours of Macron resigning. Denied but he's holding presser this morning so not being ruled out. This morning's UK GDP came in at 0% as epxected with a small rise in services offset by falls in construction and production.GBP has shrugged it off finding support elsewhere but the lack of growth will remain a concern to the BOE as they contemplate the timing of first 25bps rate cut.

Ukraine/Russia war and Middle East tensions still cast their own shadow. Remember as always to identify your preferred risk reward levels and let the algos do their thing along with the natural and speculative flows especially in days like today with lots going on. Don't get greedy or over-analyse.

Equities fell in NY then rallied into the close yet again in another repeat of the recent pattern and steady as I type with profit-takers still lurking as the CB second-guessing continues. WTI rallied on some better risk tones again to test $78.30-50 currently after holding $77.00 then $77.60 with plenty of two-way business still expected. Gold has now found a base at $2300-05 but equally failing ino $2315-20 again. Dip demand should remain but profit-takers still poised.

GBPUSD: Support coming in at 1.2700-10 yesterday helped by the further EURGBP supply and GBPJPY demand. Sellers poised 1.2780-00 still but lots of variables in play today so caution required ofc. EURGBP: Fresh lows of 0.8415-20 yesterday as the political concerns re-appeared but capping into 0.8440 so far. Politics will still supercede ECB/BOE conjecture for the moment. GBPJPY: Holding 199.80-00 amid general GBP support and renewed JPY supply and now testing 200.70.

EURUSD: A hold of 1.0720 yesterday in the retreat amid the renewed political fallout. Capping into 1.0760 as we wait on the day's big events. USDJPY: Support at 156.80 then 157.00 again and once again pushing back up through 157.30 helped by renewed JPY supply.

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