Greenback grabbing continues

Mike Paterson
Jan 17, 2024
2 min read

Wednesday 17 January 2024

Currency pairs and markets in general still in second-guessing mode and ranging amid the fragile geopolitical backstory and Central Bank hot air but USDJPY has now climbed back above 147.00 and testing 148.00 with carry-trade assistance still in play. Soggy US Empire State data did little to weaken the USD appetite and if anything mixed comments by US Fed's Waller provided enough to keep the buyers happy. Love is blind they say......

Meanwhile the Ukraine/Russia war and increasing Middle East Israel/Hamas back-story casts its own shadow over markets and still to reveal its full impact yet as I've been warning for a long time now. UK CPI data this morning came in a tad higher than expected and highlights rising/stubborn inflation conditions globally but means BOE will be taking note and thinking twice about rate cuts anytime soon. Yesterday's Canadian CPI data came in as expected but bets on a BOC rate cut next week being trimmed too.

Remember as always, focus on the price action and let the algos do the heavy lifting/dropping amid all the second-guessing. Good two-way jobbing pips to be had at the moment if you're not greedy. The important thing is to identify your preferred risk/reward entry/exit levels prior and be poised to execute.

Equities have traded lower again this morning on the softer risk tones after capping in NY but still underpinned for the moment. WTI fell again after capping at $73.50 this time with sellers poised still despite Red Sea developments but finding support at $71.00 as I type. Gold falling again on the USD demand and seemingly ignoring the fragile risk tones and now testing $2015-20 again after capping at $2045 as the jury remains out.

GBPUSD: Capping at 1.2680 and falling down through 1.2650 support amid the USD demand but holding 1.2600 and bouncing back through 1.2650-60 post-CPI data this morning as BOE rate cut hopes fade. I remain poised for further sells when momentum fades but patience still required. EURGBP: Capping at 0.8620 again and down through 0.8580 in the latest retreat post-UK CPI but holding 0.8575 so far as the CB jury remains out. GBPJPY: JPY supply prevailing again as USDJPY continues its march higher holding 185.50 to test 187.20 on a sharp rally helped by the firmer UK inflation data.We can expect rally sellers to remain poised amid all the uncertainty in these ever fickle markets but coming second at the moment.

EURUSD: Support coming in at 1.0855 this morning after breaking down through 1.0855 amid the USD demand as the jury stays out on risk and CB comments. I remain a rally seller.USDJPY: Finding support between 147.00 after breaking up through and a steady climb to test 148.00 this morning. I remain a rally seller as preferred side overall but caution/patience still required for the moment. Underpinned still but the higher we go the more the MOF/BOJ will be interested.

For more detailed analysis across a larger number of FX pairs email mike@mspfx.co.uk

Interbank rates: 08.45 GMT

GBPUSD 1.2650

EURUSD 1.0867

EURGBP 0.8591

GBPEUR 1.1637

USDJPY 147.90

GBPJPY 187.04

GBPCAD 1.7118

GBPCHF 1.0926

GBPZAR 24.1936

GBPHKD 9.8855