Wednesday 14 February 2024
USD demand notable after the stronger than expected US CPI data yesterday gave the FOMC and market doves some serious issues to consider. Stubborn inflation data globally has been on the cards for a while and with rising oil and food prices exacerbated by the Red Sea confrontations no-one should be really surprised. USDJPY broke through 150.00 in a rush and remains underpinned after capping at 150.80 so far with some verbal intevention out of Japan.
This morning's UK CPI also proving stubborn at 4% yy with core at 5.1% but a tad lower than expected and we've seen the Pound come under pressure. The Ukraine/Russia war and Middle East Israel/Hamas/Houthi/Hezbollah/Red Sea tensions are all still casting their own shadow. CB speakers today include Fed's Goolsbee and Barr, BOE's Bailey and BUBA's Nagel.
Equities remain underpinned overall and on the rise again as European trading gets underway. WTI has rallied further to test $78.00 and now finding a base where we capped previously at $77.20-25 amid supply concerns still. The longer this remains underpinned the longer inflation will take to retreat much further. Gold softer again amid the USD demand and now capping at $2000 now but holding $1985 so far in the retreat.
GBPUSD: Capping into the old 1.2600-10 support now amid the USD demand and now testing 1.2540-50 post UK CPI albeit still with some support coming from GBPJPY dip demand. I remain poised for further sells when momentum fades as we continue to range. EURGBP: Capping at 0.8535 still but holding 0.8495-00 in the extended retreat as the BOE/ECB debates continues particularly after this morning's UK CPI data. GBPJPY: Holding 188.80 this morning after capping into 190.00 in the extended rally with JPY supply notable as USDJPY broke higher. Sellers will remain poised but underpinned still for the moment.
EURUSD: Testing 1.0700 again this morning amid the USD demand after capping at 1.0730. I remain a rally seller. USDJPY: 150.00 broken amid the USD demand/JPY supply double-whammy but capping at 150.80 so far amid some intervention talk out of Japan and profit-taking. I remain a rally seller as preferred side overall given that the BOJ still don't want this racing away too far but dip demand still notable for the moment as Ive been warning.
For more detailed analysis across a larger number of FX pairs including market order flows and options expiries email mike@mspfx.co.uk
Interbank rates: 08.47 GMT
GBPUSD 1.2550
EURUSD 1.0704
EURGBP 0.8525
GBPEUR 1.1726
USDJPY 150.55
GBPJPY 189.02
GBPCAD 1.6980
GBPCHF 1.1124
GBPZAR 24.0001
GBPHKD 9.7754
USDCHF 0.8878
EURCHF 0.9503
EURHKD 8.3381
AUDUSD 0.6474
NZDUSD 0.6077
USDCAD 1.3550
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