Second-guessing continues

Wednesday 19 June 2024

Markets are still in wait and see mode for the moment with a little USD supply still overall in the wake of soft US data again but steadier risk sentiment still producing JPY selling too on the cross dips. US holiday today too so not expecting much to change.

The UK CPI data this morning came in as expected albeit lower than previous but with underlying services inflation still giving the BOE some cause for concern. I don't see a rate cut tomorrow but can't rule it out. Also looking for vote change in favour of cut at very least. SNB also up the ramp tomorrow and we've seen some decent CHF demand into the event with USDCHF having broken down through some decent technical support amid the general USD supply.

While the CB 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.

Equities still seeing two-way trading amid the CB/political conjecture but rallying and adding to the better risk tones albeit with profit-takers still lurking.  WTI still seeing good strength and been up further to test $80.80-00 on those reports that recently solid levels of inventories may soon start depleting and the better risk sentiment.Gold still finding a base at $2300-10 but failing at $2335 again this time. Dip demand should remain but profit-takers still poised.

GBPUSD: Support coming in at 1.2670-75 again yesterday and 1.2700 so far this morning and testing 1.2725-30 post-UK CPI with EURGBP and GBPJPY flows still in play too.More two-way expected as we continue to range tightly. EURGBP: Holding 0.8430 this morning's GBP rally post-CPI after capping at 0.8455 amid the tight ranges elsewhere. EU politics still casting a shadow and BOE tomorrow. GBPJPY: Holding 200.00 amid the firmer risk sentiment but capping at 200.75-80 again so far. Sellers will remain poised amid fragile risk sentiment as I've been warning but underpinned overall still for the moment.

EURUSD: Capping at 1.0735-45 still after one extended spike with a hold of 1.0710-20 as we range tightly. Cross flows in play. USDJPY: Two-way business still with a cap at 158.20 yesterday where I noted resistance but equally support at 157.50-60.

Traders - For more detailed analysis across a larger number of FX pairs including market order flows and options expiries email mike@mspfx.co.uk