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  • Writer's pictureMike Paterson

Greenback lower. Risk firmer

Thursday 22 February 2024

Yesterday's FOMC Minutes were on the hawkish side with most members seemingly in no rush/cautious in cutting rates but perhaps not hawkish enough for some as we saw initial USD demand but since then traders have been in sell mode. The bearish USD mood has been further exacerbated by better risk tones after Nvidia posted impressive Q4 earnings and equity markets have been quick to move higher again with Japan's Nikkei posting record levels.

Fed's Bowman speaks again today Thursday alongside her colleagues, Harker, Cook, Kashkari, and Waller. EZ PMI data so far has beaten expectations.The Ukraine/Russia war and Middle East Israel/Hamas/Houthi/Hezbollah/Red Sea tensions are all still casting their own shadow. While all the uncertainty remains, both economical and geopolitical, remember to identify your preferred risk reward levels and let the algos do their thing along with the natural and speculative flows. Don't get greedy or over-analyse.

Equities enjoying good support still as European trading gets underway and should remain underpinned in the current environment. WTI testing $78.20 as I type in an extended rally from $76.30-50 yesterday helped by dip demand still on supply concerns. Gold has found some dip demand around $2020 again as USD supply returns but capping at $2035 as we continue to range tightly.

GBPUSD: Support at 1.2600-10 yesterday and a decent rally to 1.2700-10 this morning amid USD supply and GBPJPY demand. I remain poised for further sells when momentum fades as we continue to range overall. EURGBP: Basing at 0.8545 again this morning after capping at 0.8575 once more as the BOE/ECB debates continues and we range tightly. GBPJPY: Holding 189.50-60 yesterday and a strong rally on the better risk tones but capping into 190.80 as sellers remain poised on core pairs.

EURUSD: Holding 1.0800 on the USD supply but capping above at 1.0880 in the extended rally as we range still. I remain a rally seller and have added to some shorts. Some options in play potentially if we rally further. USDJPY: 149.90-00 holding still with JPY supply helping to underpin but capping into 150.50 this time. I remain a rally seller as preferred side overall given that the BOJ still don't want this racing away too far but ranging for the moment.

For more detailed analysis across a larger number of FX pairs including market order flows and options expiries email

Interbank rates: 08.36 GMT

GBPUSD 1.2702

EURUSD 1.0871

EURGBP 0.8558

GBPEUR 1.1683

USDJPY 150.17

GBPJPY 190.75

GBPCAD 1.7182

GBPCHF 1.1122

GBPZAR 23.9757

GBPHKD 9.9517

USDCHF 0.8753

EURCHF 0.9516

EURHKD 8.5203

AUDUSD 0.6588

NZDUSD 0.6210

USDCAD 1.3446

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