Greenback under pressure still overall

Monday 15 July 2024

Friday's US PPI data came in stronger than expected which gave the Greenback some initial respite after Thursday's softer CPI had provided a slap and the MOF USDJPY intervention. Then a combination of softer US sentiment data and the CPI data reality and Powell's slightly dovish comments earlier in the week plus a reversal lower in US bond yields all combined to send USD lower again with USDJPY once again leading the way.

The week-end's big event (other than last night's football..) was a failed assassination attempt on former President Trump. Shock waves sent through the US landscape and elsewhere but it's given him a further boost to his election chances and we've seen some USD demand return in Asia helped by firmer US bond yields but softer again as I type.

Today brings another speech from US Fed Chair Powell at 16.30 GMT but little of note on the data front. Focus will also be on the latest ECB rate decision/statement on Thursday but no cuts expected before August/September.

US equity markets remain underpinned but we have seen a retreat in European markets this morning amid the many variables and proft-taking after Friday's gains. WTI has fallen to testing $80.70-80 again after capping at $81.80-00. Ever fickle for the moment and expected to range still. Gold has found a few profit-takers but holding $2400 again since capping at $2418. Dip demand should remain but profit-takers/sellers still poised.

GBPUSD: Support coming in at 1.2900 then 1.2950-60 on the break amid the USD supply before capping into 1.3000. EURGBP: Continuing to fall amid some renewed EUR supply but holding 0.8390 so far after a cap into 0.8420 this time. ECB/BOE rate cut conjecture also in play still. GBPJPY: A further rapid retreat on Friday but a hold of 204.00 after capping at 206.00 as the USDJPY volatility continued.

EURUSD: Holding 1.0875-80 after capping at 1.0910 in the USD-led rally. Very large option contract interest between 1.0895-25 today should help contain further gains if USD supply remains but seems underpinned in current scenario. I remain a rally seller as my preferred side overall. USDJPY: Support coming in around 157.40 again on Friday but failing into 158.50 in the rallies so far as MOF/BOJ intervention fears remain and USD supply overall.

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