Focus on Jackson Hole

Mike Paterson
Aug 22, 2023
2 min read

Tuesday 22 August 2023

Markets have got their eye on the annual Jackson Hole gathering this weekend with US Fed Chairman Powell speaking on Friday at 10.00 EST. US bond yields were on the rise again yesterday posting levels not seen since the COVID pandemic but we've seen some USD supply and equity markets rising regardless.

China is still trying to stem Yuan weakness by hiking up the reference rate but the pressure remains, while in Japan there seems no urgency to intervene and the better risk appetite sees JPY supply returning on the crosses even if USDJPY finds itself in relative retreat.

Equities are underpinned again for the moment with dip buyers prevailing while WTI is in retreat and posing lows of $79.70 as I type after capping at $81.00 then $80.50 again as the uncertainty continues. Gold finding support around $1885 again in yesterday's retreat bu natural sellers still prevailing between $1900-10 amid the general commodity/metals weakness as the jury remains out and tight ranges prevail. Geopolitical concerns still very much a threat to market stability with focus on Ukraine/Russia but also tension in the Middle East among other areas of conflict.

GBPUSD: Testing 1.2800 again this morning amid the USD supply after a good hold of 1.2730-50 yesterday amid the GBPJPY demand. I remain bearish on the UK and GBP overall. EURGBP: Finding a cap at 0.8550-60 again but holding below 0.8530 with more two-way expected overall as core pairs make their mind up. GBPJPY: Capping at 186.80 this time after a strong hold/rally from 185.80 amid the better risk tones. Sellers will remain poised but underpinned still for the moment with core pair dip demand also helping.

EURUSD: Holding support at 1.0880 but capping at 1.0930 again with decent option interest today at 1.0900 helping to contain again. I prefer the rally-sell side still. USDJPY: Capping at 146.40 a couple of times in the past 24 hours amid some USD supply but underpinned overall by some JPY supply and holding 145.60 in the retreats so far. I remain a rally seller as preferred side overall but with patience a virtue as ever. Equally dip buyers should continue to find some results but up here I still regard the risk being to the downside. EURJPY: Flatlining between 158.80-159.50 with support from the better risk tones and core pair dip demand but sellers poised.

More detailed analysis across a variety of pairs and 1-2-1 mentoring services from mike@mspfx.co.uk

Interbank rates: 08.30 BST

GBPUSD 1.2792

EURUSD 1.0925

EURGBP 0.8541

GBPEUR 1.1707

USDJPY 145.81

GBPJPY 186.53

GBPCAD 1.7318

GBPCHF 1.1218

GBPZAR 24.0637

GBPHKD 9.9712