ECB remains cautious and markets now wait on NFPs

Friday 7 June 2019

ECB announced their latest thoughts yesterday and provided some good two-way business but in the end it was still a cautious delivery as we expected. Now attention turns to the US NFP jobs report today at 12.30 GMT and whether it will add weight or refute the growing anticipation of a Fed rate cut this year. Today also sees the official stepping down as PM by Theresa May. I was taught to say nothing if I didn't have anything good to say about anyone so I'll just leave it at that....

GBPUSD had another test of 1.2750 but held again and we've since tested good support at 1.2680 before rallying to 1.2725 while EURGBP had some fun and games around the ECB announcement, also falling hard below 0.8830 only to bounce back even faster. GBPJPY remains range-bound but making steady progress higher atm with USDJPY also holding 108.00 and rebounding well but sellers remain poised on core pairs too.

I remain GBP bearish overall and continue to rally-sell as my preferred strategy and buy back in the dips amid all the uncertainty/indecision including Brexit. I repeat no change to this view for the foreseeable future. Dip buyers will still expect to find better value for money the lower we head but that's still not happening in any big fashion at the moment.

The ECB duly delivered their unchanged rate announcement and made a slight adjustments to TLTROs and future rate change time-frames before the Draghi presser gave EURUSD a nudge back down having dropped hard to 1.1200 only to rally just as quickly to finally test 1.1300 having held 1.1280 for a while.We have large option expiry interest today again at 1.1150, 1.1200 1.1250-60, 1.1275, 1.1300 and 1.1315-25 so we should expect range to be contained but may have some fun on the NFP data.

USDJPY had a couple of looks at 108.00 but large option contract expiries there proved enough to make a decent hold to see a good rally to 108.56 having triggered stops through 108.30. USDCHF had some fun and games with EURUSD in a whirl post-ECB but EURCHF also in tight-range mode but supported by the usual dip demand with the SNB ever casting their shadow.

AUDUSD is still making its mind up and tightly bound but proving resilient amid some bearish news while USDCAD failed at the 1.3430 offers and has been in solid retreat amid firmer oil prices helping the Canadian$.

Have a good day/week-end out there one and all.

Interbank Rate 08.25 BST

GBPUSD 1.2719

EURUSD 1.1266

EURGBP 0.8857

GBPEUR 1.1289

GBPAUD 1.8234

GBPCAD 1.6982

USDJPY 108.46

USDZAR 15.1274

EURJPY 122.20

EURCHF 1.1192