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  • Writer's pictureMike Paterson

Greenback sold after soggy US data

Tuesday 4 June 2024

Yesterday's final US manufacturing ISM/PMI data came in below expectations and in current customary fashion the algos jumped all over it, US yields fell and the Greenback got sold off as expectations of a rate cut from the US Fed  increased. Risk appetite softened amid the weaker economic outlook and we saw USDJPY lead the way lower helped by  renewed JPY demand. In Asia Japanese Fin Min Suzuki says the intervention in April/May has helped curb speculative moves.

This morning's Swiss CPI data came in around expectations but will still leave questions for the SNB to address re rate cuts. Othe data today includes US Jolts job openings and Factory Orders. Attention moves toward the BOC and ECB interest rate decisions tomorrow and Thursday and then of course a monthly infatuation with the US Non Farm Payrolls report on Friday.

Ukraine/Russia war and Middle East tensions sadly still cast their own very large shadow. Remember as always to identify your preferred risk reward levels and let the algos do their thing along with the natural and speculative flows especially in days like today with thin liquidity. Don't get greedy or over-analyse.

Equities fell again yesterday then rallied in Asia but falling again in early Europe with profit-takers still lurking as the CB second-guessing continues. WTI also fell again amid the gloomier economic outlook this time from $76.00  then $74.00 to now test $72.80-00 as I type. Gold rallied to $2355 amid the softer risk tones but ran out of puff with more profit-taking in play and now testing $2335 as I type. Dip demand should remain.

GBPUSD: Capping at 1.2800 initially in the rally yesterday but then finally broke through in Asia only to fail at 1.2820 helped once again the risk-off GBPJPY supply.EURGBP: Holding around 0.8510 again but capping at 0.8520 as we continue to range tightly. Expect more two-way as the ECB/BOE rate cut conjecture and cross flows continue. GBPJPY: Holding 198.50 so far after failing at 200.30-50 then 199.50 amid softer risk tones. Sellers will remain poised in these fickle markets but I'm still expecting dip buyers too.

EURUSD: Holding 1.0850 yesterday amid the USD supply but failing at 1.0910-20 in the extended rally. We continue to range overall with ECB lurking on Thursday. USDJPY: Support at 156.50-60 finally broken yesterday amid the USD supply/JPY demand double whammy and a decent retreat eventually to 155.25-30 this morning.

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