Friday 12 July 2024
Yesterday's softer than expected US CPI data gave USD sellers a good run as the chances of a September rate cut, and least one more by year-end, sent markets into second-guessing mode again but it was the use of this uncertainty/USD shove lower by the MOF that really grabbed the headlines.
USDJPY had fallen but was finding dip buyers again until the intervention and we saw a rapid decline to 157.40 triggering stops along the way. We saw a bounce into 159.00 then further into 159.50 in early Asia before another wave of reported intervention sent the pair back down to 157.70. Lots of volatility since but up above 159.00 again as I type with USD finding a little bit of demand again generally but very fragile still. Heady times but this has always been on the cards as I've been warning.
Today brings US PPI data and also the Michigan Consumer Sentiment Index which should have the algos running around again if wide of the mark but the focus will also be on any use of the volatility by the MOF, if indeed this is their new/latest tactic.
US equity markets remain underpinned but we have seen a retreat amid the volatility despite the bearish data. WTI rallied from $80.80-00 and testing $82.20-20 as I type. Ever fickle for the moment and expected to range still. Gold has ralied strongly on the equity market retreat post-CPI and testing $2425 and holding $2400 since. Dip demand should remain but profit-takers/sellers still poised.
GBPUSD: Support coming in at 1.2850-60 and a strong rally post-CPI before capping at 1.2950 helped by the intervention-led GBPJPY supply but holding 1.2890-00 since. More two-way expected as the USD jury remains out. EURGBP: Falling amid the initial GBP demand but holding 0.8410 so far after a cap into 0.8430. ECB/BOE rate cut conjecture also in play still. GBPJPY: Initial GBP demand and ongoing JPY supply saw the pair underpinned but capping above 208.00 again before the MOF-led tumble into 203.90-00.
EURUSD: Held 1.0830 then a rapid rally post-CPI but capping at 1.0900. Latest data now factored in and EURJPY flows in play too as well as decent option contract interest. USDJPY: Support coming in at 157.40 yesterday in the MOF-led rapid retreat per my notes above but failing at 159.50 in the rallies so far MOF/BOJ intervention fears remain.
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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