Greenback takes a turn lower.

Wednesday 6 March 2024

Some USD supply notable in the past 24 hours in the wake of weaker US data and lower bond yields which has also seen Gold pushing higher yet again to post record levels of $2140. USDJPY has fallen back through 150.00 and we've seen some JPY demand generally. Markets expecting June rate cut from the US Fed and reports that Chair Powell will be less hawkish today.

Central Bank decisions from the BOC today and ECB tomorrow. Also today and tomorrow we have Fed's Powell giving his Semi-Annual Mon Pol testimony to US lawmakers with US NFP data due Friday too. UK Spring Budget today at 12.30 GMT with the Fin Min between a rock and very hard place re tax cuts/additional borrowing as a General Election looms this year, possibly as early as May. I don't understand all the hype around this atm in the UK to be honest because any changes will be reversed soon enough when the Tories get voted out. Click bait moves in mysterious ways.

Equities found themselves in retreat again amid some profit-taking but remain underpinned overall on the firm belief that interest rates will be coming down at some stage and seemingly ignoring ecomomic slowdown and geo-political fragility. WTI capping at $79.00 again but holding $77.20 as the second-guessing on Red Sea/Gaza and global economy continues. Gold has continued its impressive surge higher to post record highs of $2140 yesterday albeit lower at $2125 as I type but underpinned overall on the belief that FOMC will start cutting rates in June.

GBPUSD: Failure around 1.2730-40 this time after holding 1.2670 and rallying through 1.2700-10 amid the USD supply but GBPJPY selling helping to cap. Sellers remain poised, as do I, for further opportunity when momentum fades as we continue to range overall. EURGBP: Basing around 0.8535 this time and capping at 0.8550 as the BOE/ECB debates continues. ECB looming tomorrow. GBPJPY: Testing 189.80 support line again in the retreat from 191.00 amid the JPY demand but currently back up to 190.65 as cire pairs find dip demand as we continue to range.

EURUSD: Support around 1.0830-40 still but failing into 1.0875. No coincidence we have large options contracts rolling off today at each end. I remain a rally seller. ECB looming tomorrow. USDJPY: Capping at 150.50 yesterday and an extended retreat into 149.30-40 before bouncing as some USD supply returns this morning. Pips gratefully banked and I remain a rally seller as preferred side overall given that the BOJ still don't want this racing away too far but still underpinned for the moment as we range tightly.

Traders - For more detailed analysis across a larger number of FX pairs including market order flows and options expiries email mike@mspfx.co.uk