Friday 20 January 2023
Some good two-way business in Forex markets again, albeit in tight ranges while the USD/FOMC/CB jury remains well and truly out and desperate for further clues to future policy. In Japan JGB yields continue to drift lower post-BOJ helping to underpin JPY pairs but the speculation on future Yield Curve Control changes remain.
Equities are off their lows but struggling to make too much headway highway so far while WTI duly held the $78.50 support I mentioned yesterday and has seen a steady rally to $81.40 .Gold has found support now at the recent resistance line at $1920-25 and pushing up to $1935 .Ukraine/Russia war continues to be the elephant in the room amid other geopolitical risk. Comments from Fed's Williams and Brainard both came in a little dovish, though neither commented on whether 0.25% hikes were on the slate rather than 0.5%.
More Fed talk today from from Harker and Waller and a caucus vote will take place on Sunday for a new party leader/PM in NZ following Arden's shock resignation impacting on NZD. SNB's Jordan speaking atm in Davos says "Inflation is too high so focus on price stability is absolutely essential." UK retails sales data earlier was soggy and helping to cap GBP gains.
GBPUSD: Still underpinned overall at 1.2300-30 helped by some EURGBP supply and GBPJPY demand still but failing at 1.2400 a few times and pushed back a little further this morning post-retails data but holding 1.2350 as I type. EURGBP: 0.8740 now providing decent support after an extended dip into 0.8720 yesterday but the rally limited to 0.8780 for the moment with sellers poised 0.8780-00 still. GBPJPY: Finding support at 158.80.00 now amid some general JPY supply but capping at 160.00.
EURUSD: The old resistance at 1.0860 capping so far but bids building at 1.0820 and 1.0800 as we continue to range. USDJPY: A hold of 128.25-50 amid a little USD dip demand generally and JPY supply but capping at 129.30 so far as the jury remains out. EURJPY: Hold of 139.00 then 139.50 with sellers coming second at the moment amid the general JPY supply and core pair dip demand. USDCHF: That line in the sand around 0.9150 I mentioned yesterday continues albeit with sellers still poised into 0.9200. EURCHF underpinned too after the recent retreat and no coincidence as we see some "smoothing" going on.Some Jordan comments this morning helping to support with SNB ever-watchful. EURCHF: Support line in the sand at 0.9880 still in place and tying in with those USDCHF bids around 0.9150 and pushing up through the 0.9920 resistance with help from some Jordan comments from Davos.
AUDUSD: Finding support at 0.6900 where we also have large option contract interest rolling off today. AUDJPY demand also helping but capping at 0.6950 so far as I type. Still keep an eye on AUD crosses. NZDUSD: The support at 0.6375-80 holding again and testing 0.6440 as I type as the two-way business continues. PM Arden resignation creating ripples of uncertainty ofc. USDCAD: Capping at 1.3500 this time amid the firmer oil price and some CADJPY demand but supported at 1.3440-40 amid the general USD dip demand. Expect more two-way business amid the USD/oil variables.
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Let's continue to be careful out there and have a good week-end one and all.
Interbank rates: 07.54 GMT