Wednesday 3 July 2024
Better risk-appetite led by rising equity markets sees USDJPY also rising again with JPY selling, along with the carry flows, still helping to underpin core pairs as I've been warning. The threat of MOF/BOJ intervention remains real as we test 162.00 this morning.
Yesterday Fed Chair Powell hedged his bets at the ECB event by acknowledging some success in bringing down inflation but then equally remained cautious on rate cuts citing strong labour data. USD wobbled then recovered but overall some USD weakness in pairs other than USDJPY as the myopic happy-clappy brigade prevail again. Today brings final EZ Services PMIs but more importantly US Challenger Job Cuts, ADP, weekly jobless claim early given tomorrow's US holiday, ISM Services and FOMC Minutes all ahead of Friday's key US NFP data. UK General Election tomorrow with polls pointing to a strong Labour Party victory that's been factored in over the past few months so I'm not anticipating much GBP volatility for the moment at least.
Equities remain underpinned and rallied strongly albeit with sellers still lurking. WTI dip demand notable again after capping at $83.85 in yesterday's better-risk rally but falling to test $82.40-50 again. Supported on the lows still this morning as I type. Gold still finding a base at $2310-20 and pushing up to $2345 this time. Dip demand should remain but profit-takers/sellers still poised.
GBPUSD: Support coming in around 1.2620-30 again yesterday and lookin to test 1.2700-10 this morning amid some USD supply but equally strong GBPJPY demand.More two-way expected as we continue to range tightly. EURGBP: Holding 0.8465 but capping into 0.8480 now. EU and UK politics still casting a shadow along with ECB/BOE rate cut conjecture. GBPJPY: Holding 204.30-50 this time amid the general JPY selling and now testing 205.50 in the extended heady rally. Sellers will remain poised but underpinned overall still for the moment.
EURUSD: Capping at 1.0760 this morning so far after a hold of 1.0710-20 yesterday then the pivotal 1.0730 as we continue to range tightly. USDJPY: Support coming in at 161.25 amid the ongoing JPY supply to post fresh highs of 161.95. MOF/BOJ intervention fears remain but not putting off dip buyers still.
Traders - For more detailed analysis across a larger number of FX pairs including market order flows and options expiries email mike@mspfx.co.uk
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