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  • Writer's pictureMike Paterson

Greenback sellers return

Wednesday 24 January 2024

FX currency pairs still in second-guessing mode and ranging albeit with a little USD supply returning amid softer US bond yields and helped by softer US data yesterday after a period of initial gains on the session. The Peoples Bank of China says they will cut RRR from 5 Feb and will use various policy tools to provide reasonable liquidity while there's been fresh noise about BOJ tightening and some JPY demand re-appearing amid higher JGB yields.

Other CBs in focus with the BOC today and ECB tomorrow plus Norges, and SARB plus US core PCE and Q4 GDP data which will feed into the Jan 31 FOMC second-guessing. Meanwhile the Ukraine/Russia war and Middle East Israel/Hamas/Houthi/Red Sea tensions still cast their own shadow.

Equities remain underpinned overall still and on the rise this morning helped by some better risk tones. WTI capping at $75.50 again yesterday with sellers poised still despite Red Sea concerns but holding $73.50 as we contine to range. Gold held $2015-20 again but still capping above $2035 as we continue to range tightly.

GBPUSD: Holding the old 1.2650 support area, per my tweet at the time, after breaking down through 1.2680 amid the initial USD demand but now back testing 1.2730 as I type amid the ongoing range trading. I remain poised for further sells when momentum fades but patience still required. EURGBP: Capping around 0.8565-70 now amid some general GBP demand again but holding 0.8545 in the retreats as the CB jury remains out. ECB tomorrow in focus. GBPJPY: Capping this time into 188.50 then 188.00 as JPY demand returns and USDJPY fails at 148.50 in yesterday's bounce but a hold of 187.40 in the retreat so far. We can expect rally sellers to remain poised amid all the uncertainty in these ever fickle markets but still seeing some decent dip demand for the moment.

EURUSD: Support coming in at 1.0820 yesterday with the 1.0828 100DMA helping to provide support in the dip per my tweet but back to 1.0885 helped by the general USD supply returning. I remain a rally seller. ECB tomorrow in focus. USDJPY: Capping around 148.50 again in yesterday's bounce as we retreat back into 147.40 amid the USD supply/JPY demand double whammy. I remain a rally seller as preferred side overall but caution/patience still required for the moment.

For more detailed analysis across a larger number of FX pairs email

Interbank rates: 08.43 GMT

GBPUSD    1.2711

EURUSD    1.0870

EURGBP    0.8553

GBPEUR    1.1690

USDJPY    147.57

GBPJPY    187.55

GBPCAD    1.7082

GBPCHF    1.1048

GBPZAR    24.0546

GBPHKD    9.9011

USDCHF    0.8668

EURCHF    0.9422

EURHKD    8.4625

AUDUSD    0.6592

NZDUSD    0.6126

USDCAD    1.3450

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