Jury still out

Wednesday 15 March 2023

Still some fragile risk sentiment out there as markets continue to second-guess the potential banking sector fallouts and CBs with the ECB next up the ramp tomorrow. More conjecture that they might indeed still stick with a 50bps hike has helped give the Euro some support again while JPY supply was notable again as markets steady but USDJPY unable to hold above 135.00 and some JPY demand returning as I type.

US PPI and Retail Sales data today at 12.30 GMT will be keenly observed for more FOMC clues after yesterday's decent CPI beat even if it did disappoint a few hawks. Dilemma for CBs now is inflation/rate hike/fragile banking sector trade off. UK Spring Budget also at 12.30-ish GMT after PMQs where the Fin Min will lay out latest fiscal policy and forecasts. No great surprises expected that haven't already been leaked and GBP unlikely to be affected.

Equities in retreat again this morning after a down then up day yesterday as the rollercoaster ride continues amid the uncertainty while WTI is off its $71.00 extended lows as sellers prevailed amid the global uncertainty and OPEC supply chatter after the rally capped at $74.50. Gold is currently challenging the demand/support between $1890-00 now after failing this time at $1905 and longs taking a bit more profit. Ukraine/Russia war continues to be the main geo-political elephant in the room with ongoing US/China tensions in the mix too. Yesterday's US/Russia drone dispute not helping calm the general waters but not a major incident per se.

Remember, focus on the price action and let the algos do the heavy lifting/dropping. The important thing is to identify your preferred risk/reward entry/exit levels prior and be poised to execute.

GBPUSD: Capping around 1.2200 again yesterday and some re-sells duly placed and 1.2130-40 support breaking down now as the jury remains out. I remain a rally seller still albeit continuing with some caution. EURGBP: Capping into 0.8840-50 again after support/bids building now at 0.8800-15 as some EUR demand returns ahead of ECB tomorrow. Expect some more two-way trading as core pairs fluctuate. GBPJPY: A support line at 163.00 found yesterday after the retreat from 164.00 and a subsequent solid rally bavk up through there as JPY supply returned only to fail again and currently in retreat as I type as JPY demand returns and USDJPY fails around 135.00 again. Sellers will remain poised as the uncertainty/fickle sentiment continues.

EURUSD: Holding 1.0700 after the drop from 1.0750 but then another test of 1.0750 ( where we also have large option contract interest today) only to fail once more. Re-sells duly placed upstairs and keeping some core shorts. I remain a rally seller as my preferred side still but some caution required around ECB tomorrow. USDJPY: Good two way business in the past 24 hours essentially in a 134.00-135.00 range and Some pips banked in the retreats after rally re-sells into 135.00 per ongoing strategy.

Full update available from mike@mspfx.co.uk

Interbank rates: 08.32 GMT

GBPUSD 1.2150

EURUSD 1.0732

EURGBP 0.8832

GBPEUR 1.1321

USDJPY 134.85

GBPJPY 163.89

GBPCAD 1.6620

GBPCHF 1.1123

GBPZAR 22.1842

GBPHKD 9.4430