Thursday 30 May 2024
The Greenback has continued to take comfort from rising bond yields and softer risk appetite as equity markets found themselves in retreat. Month-end flows are USD negative as we know but there was little sign of action into the 4pm London fix yesterday which suggests it was behind the USD selling earlier in the week. There will still be some to be done so keep it in mind still.
Speaking in Asia SNB's Jordan suggested that intervention to buy CHF to counter the inflationary impact of a weak Franc was still very much on the cards. Cue CHF demand to add to the softer risk buying. US data slate today includes weekly jobless claims, GDP and PCE. Ukraine/Russia war and Middle East tensions sadly still cast their own very large shadow.
Equities fell sharply yesterday and falling again in Asia/early Europe adding to the risk-off tones with profit-takers still lurking as the CB second-guessing continues. WTI has also fallen in that scenario but holding $78.50-60 after capping at $80.50 then $79.50 yesterday. Despite the softer risk appetite Gold has also fallen from $2345 to test $2320-25 with some profit taking continuing but appetite for the shiny stuff in the dips remains.
GBPUSD: Capping at 1.2750-60 as the USD demand continued yesterday and a break of 1.2700 to test 1.2680 helped by GBPJPY supply returning. I remain a rally seller per ongoing strategy. EURGBP: Capping around 0.8515 still amid the general EUR supply but also holding around 0.8495-00 again as the ECB/BOE rate cut conjecture and cross flows continue. GBPJPY: Capping AT 200.50 as the softer risk JPY demand returned but holding 198.75 so far with core pairs finding dip demand.
EURUSD: Holding 1.0790 in the extended retreat from 1.0850-60 amid the USD demand and possible month-end coro flows as we continue to range tightly. I remain a rally seller as my preferred side. USDJPY: Support coming in at 156.50-60 again after falling from 157.50-60 amid the softer-risk JPY demand.
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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