More of the same

Wednesday 29 November 2023

Yesterday the Greenback fell again helped by month-end flows providing a larger than average USD sell-signal but additionally triggered by the usually hawkish Fed's Waller suggesting rate cuts are in the discussion mix. US bond yields fell further and USD continued its journey lower.

The RBNZ kep rates on hold as expected but the hawkish pause surprised markets. A tweak in language and an outlook that was revised higher plus bias to a further hike saw NZD rally strongly. AUD monthly CPI on the other hand, came in lower than expected, resulting in a paring of RBA February hike odds. Regional German inflation just being released is softer than expected too and will give ECB hawks something to think about. The ongoing Middle East back-story sadly continues meanwhile and casts its own shadow over markets but still not driving prices. US CPI data tomorrow in focus.

Equities have been up and down again on the variable risk but have rallied in early European trading. WTI capping at $77.00 with global demand concerns continuing and OPEC+ meeting starting tomorrow but with a wobble on some reports, since denied, that the gathering was in doubt amid disagreements. Gold has found a base at $2015 this time and rallied strongly to test $2050 amid the USD supply and uncertain risk sentiment.

GBPUSD: Holding 1.2600 then 1.2650 and remaining underpinned for the moment amid the USD supply but still tempered by some GBPJPY supply and capping at 1.2730. I remain poised for rally sells when momentum fades but caution still required for the moment. EURGBP: Support at 0.8645 this time after capping at 0.8665 which is being tested again as I type. More two-way expected amid the core pair fluctuation/CB rhetoric. GBPJPY: Basing at 186.60 after another JPY-led retreat this time from 187.50 amid softer risk tones but some core pair support still. Sellers remain poised.

EURUSD: Support now around 1.0970 and a break of 1.1000 triggering a few stops amid the USD supply before retreating . I remain a rally seller overall still but caution required. USDJPY: Capping at 148.50 then 148.00 now but holding 146.65 in the latest retreats. Jobbing pips gratefully banked and I remain a rally seller as preferred side overall at these still elevated levels.

For more detailed analysis across a variety of pairs email mike@mspfx.co.uk

Interbank rates: 08.46 GMT

GBPUSD 1.2700

EURUSD 1.0990

EURGBP 0.8655

GBPEUR 1.1553

USDJPY 147.27

GBPJPY 187.00

GBPCAD 1.7206

GBPCHF 1.1114

GBPZAR 23.4862

GBPHKD 9.8772