Friday 29 July 2022
Awful US GDP data technically puts the US in recession despite Fed Chair Powell's denial the other night. Rate hawks and US Dollar bulls have taken flight, especially in USDJPY and markets are all-a-flutter again as another month closes.We have some more key US PCE data out today at 12.30 GMT. Powell's reference to it on Wednesday giving this inflation indicator greater significance.
Soggy risk sentiment, dovish US rate hike stance/US bond yields tumbling and weaker USD bringing mixed tones and price action for equity markets albeit mostly underpinned still but gold and oil feeling some love and nudging higher. Final month-end London fix today and signals point to net USD selling still. According to reports the signal has strengthened and now stands at about twice the historical average except EURUSD.
As always we don't know precisely how much has been done already but either way, don't over-analyse but be ready with your preferred levels/strategy, place orders and let the algos do the heavy work. Discipline is key as always but equally hesitation can often ruin a great idea.
GBPUSD: Holding 1.2100 yesterday after capping into 1.2200 and some pips banked in the retreat but a solid rally since before capping at 1.2250 helped by the GBPJPY supply. Soggy EURGBP overall helping to support along with potential month-end USD flows too as I had warned. I will stand poised for rally resells as ever. EURGBP: 0.8365 lows now posted amid the general EUR supply still staging a rally to 0.8400 as GBPJPY supply dominates the landscape. I still think we'll see two-way pips jobbing opportunity but soggy EUR will limitt rallies as I've warned before. GBPJPY: Now capping at 164.00 but holding 161.70 as I type in the extended retreat with USDJPY once again leading the USD sell-off. This pair's decline also helping to cap GBPUSD as ever.
EURUSD: That support I highlighted at 1.0100-15 still holding well with market bids building 1.0110-20 per my tweet and a decent rally to test 1.2250 again where we have large options interest today. Sellers including me prevailing amid general EUR supply again. USDJPY: Capping at 136.00 then 135.00, then 134.00 as markets reacted to US GDP data and bond yield reaction triggering stops in thin liquidity to test 132.50 before bouncing to 133.30 as I type.EURJPY: Capping at 137.50 this time and a steady retreat to 135.50 before finding support this morning. Sellers poised still whenever risk turns and/or reality checks back into town as I've been warning. USDCHF: We've had failure now at 0.9600 amid the USD retreat and general CHF demand still but some support at 0.9500 this morning with SNB keeping an eye on things as ever. EURCHF: Capping at 0.9760 and falling again to test 0.9700 where I've warned SNB will be watching but sellers will remain poised.
AUDUSD: A good hold around 0.6960 and rally but failing at 0.7030 helped by some AUDJPY and AUDCHF supply again and now 0.6985. GBPAUD holding 1.7360 again but tightly bound still after capping at 1.7440. NZDUSD with a good rally from 0.6260 but capping at 0.6330 this time helped by the NZDJPY supply and now some general USD demand. GBPNZD holding 1.9300 this time after capping at 1.9400 but still tightly bound. USDCAD: Capping at 1.2860 this time and an extended retreat below 1.2800 amid softer USD/Firmer oil combo but rallying to 1.2825 this morning amid some generally firmer USD tones. 1.2820-40 area still pivotal. I expect some good two-way business still overall amid the variable risk/oil and USD tones.
Let's continue to be careful out there and have a top weekend.
Interbank rates: 08.57 BST