Wednesday 10 July 2024
We've seen some USD buying return with JPY weakness still notable amid firmer risk appetite in the wake of US Fed Chair Powell's first day of testimony to US lawmakers. He effectively ruled out rate hikes but said he wouldn't talk about a change in interest rate cut expectations. While pointing out the labour market had cooled he also said it wasn't a great inflation factor. Markets pricing in two rate cuts with the first coming in September and another in December. Some USD supply returning as I type.
Earlier in Asia the RBNZ left rates on hold at 5.5% but with dovish tones that surprised markets and we've seen NZD fall as a result. Today brings the second part of Powell's testimony but little of note on the data slate again. US CPI tomorrow in focus.
While the CB, political and USD second-guessing continues remember as always to identify your preferred risk reward levels and let the algos do their thing along with the natural and speculative flows especially in days like today with thin liquidity. Don't get greedy or over-analyse.
US equity markets remain underpinned albeit with sellers still lurking while WTI has continued its retreat capping at $81.50 and now testing $80.35 in the additional retreat. Ever fickle for the moment and expected to range still. Gold has found some buyers as I've been warning, this time at $2350-60 and now testing $2370 again. Dip demand should remain but profit-takers/sellers still poised.
GBPUSD: Support coming in at 1.2775 after yesterday's failure at 1.2820 amid the renewed USD demand, but GBPJPY dip demand once again helping to support. More two-way expected as we continue to range. EURGBP: Tightly bound 0.8445-60 still amid ECB/BOE rate cut conjecture and core price action. GBPJPY: Following USDJPY up again amid the generally firm risk tones and ongoing JPY supply. Holding 206.00-20 in the retreat this time but capping at 206.65.
EURUSD: Still holding decent support around 1.0800 but capping at 1.0825-30 still as we range tightly. USDJPY: Support coming in at 161.00 this time on the USD demand/JPY supply double whammy but failing at 161.60. 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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