Wednesday 27 July 2022
Tonight at 18.00 GMT we have the US Fed's latest FOMC policy decision with markets pricing in a 0.75% rate hike but neither are they ruling out the full 1%. Either way the Fed is unlikely to detour far from its path of more hikes to come this year while being very aware of fragile economic date. Inflation control vs risk of recession. A problem shared by Central Banks globally.
Yesterday saw a tumble in the Euro amid the reduction of gas supply to the EU from Russia via the Nordstream 1 pipeline to around 20% of usual flow that I warned about in my update yesterday. It took a while for the Euro to move lower to gather momentum so I hope you were able to take advantage.
Variable risk sentiment bringing mixed tones and price action for equities, gold and oil as the Fed jury deliberates. Month-end Spot value date today so keep an eye into, and on, the 4pm London fix for expected USD supply in most major pairs but less so in EURUSD (See Monday's update for detail).
GBPUSD: Holding the old support line of 1.1960 that I highlighted on Monday and warned about on Twitter as we approached but equally capping at the 1.2080 area again as we continue to range. EURGBP retreat and GBPJPY demand helping to support. EURGBP: Clinging onto 0.8400 now after yesterday's extended retreat amid general EUR supply. I still think we'll see two-way pips overall as the CB jury remains out but soggy EUR will limitt rallies.GBPJPY: Now capping at 165.30 after holding 163.50 in yesterday's retreat as the JPY/risk jury remains out.
EURUSD: The Euro has finally fallen as markets evaluate the cut in Russian gas supply which I warned about over a week ago at least and one of the reasons I preferred to be short so I hope you took heed. Support now at 1.0100-15 but sellers including me will remain poised. Some option interest in play again.USDJPY: Still tightly bound amid month-end and cross flows. Holding 136.30 still but capping at 137.15. Will be interesting to see the P/A into Londoin fix ahead of FOMC later.EURJPY: Support finally showing up into 138.00 yesterday amid core pair dip demnand but capping at 139.00-10. Sellers poised still whenever risk turns and/or reality checks back into town as I've been warning.USDCHF: Failure yet again at 0.9660 amid the EURCHF retreat and general CHF demand still. SNB will be keeping an eye on things as ever but seemuingly not in a rush at the moment. EURCHF: Capping at 0.9780 yesterday and falling back below 0.9740 on the soggy EUR tones. SNB will be watching but sellers will remain poised.
AUDUSD: A good cap at 0.6960 this time but holding 0.6910-20 in the retreat still. GBPAUD holding 1.7300 in latest retreat but tightly bound still after capping at 1.7420. NZDUSD also tightly bound capping at 0.6250 this time but holding the old 0.6220-25 support area as I type. USDCAD: Capping at 1.2900 as oil priced rallied and helped by some month-end USD supply but holding 1.2850 as I type ahead of the larger 1.2820-40 support area. Decent options in play today too.
Let's continue to be careful out there.
Interbank rates: 08.40 BST
GBPUSD 1.2043
EURUSD 1.0136
EURGBP 0.8417
GBPEUR 1.1879
GBPJPY 165.00
GBPCAD 1.5497
GBPCHF 1.1592
GBPZAR 20.3078
GBPHKD 9.3870
USDJPY 137.04
EURJPY 138.92
EURCHF 0.9767
EURHKD 7.9021
AUDUSD 0.6928
USDCAD 1.2863
USDCHF 0.9637
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