Up and down we go again

Wednesday 14 September 2022

RIP Queen Elizabeth II

Long live the King

Markets were waiting on yesterday's US CPI data and it didn't disappoint in providing some good movement as higher than expected numbers sent the Greenback spiking sharply with analysts pricing in 0.75-1.00% rate hikes. Equity markets also fell but remain underpinned overall for the moment.

Some USD supply returning in Asia and early Europe led by USDJPY helpd by some intervention/rate checking talk out of Japan and equities now off their lows with Gold making its mind up after the sharp fall through $1700 and Oil ranging near its lows too. UK headline and core inflation data out this morning came in marginally softer than expected but house price inflation doubled y/y and the jury remains out on a 50 or 75bps rate hike next week. Don't forget that In light of the period of national mourning now being observed in the UK, the September 2022 meeting of the MPC has been postponed for one weeK to next Thursday 22nd. US PPI data out today 12.30 GMT.

GBPUSD: Capped at 1.1740 yesterday and plunged sharply to 1.1540 post-US CPI data, finally stopping at at old line of 1.1480 in Asia. Patience a virtue still but I prefer the rally-sell side and ever-poised. Cross flows, notably GBPJPY and EURGBP still having an impact. Option interest today in play and providing some support.EURGBP: Capped at 0.8685 but holding 0.8660 in the retreat this time as core pairs move in unison. Two-way business expected still as jury remains out. GBPJPY: Softer USDJPY tones helping to cap again at 166.50 after the sharp spike above 167.50.

EURUSD: Finding decent support at 0.9950 after the sharp drop from 1.0170. Rally sellers including me still poised. Some option interest in play again today nearby. USDJPY: Capped at 145.00 again and that seems to be a good line in the sand for Japan's authorities and global traders alike but finding support into 142.80 again this morning. EURJPY: Support now around 143.00 in the retreats but sellers prevailing above 143.50 as we range tightly still. Expect some two-way business again.USDCHF: Sharp spike to 0.9630 from 0.9520 post-US CPI andf now finding support at 0.9580 as EURUSD fails to hold above 1.0000.Some natural CHF demand still but SNB will be keeping an eye on matters. EURCHF: Testing 0.9580 a few times and holding again this morning after capping at 0.9620 helped by some general CHF demand but SNB seemingly smoothing downstairs.

AUDUSD: Din't need much of a push to cause the tumble after defying gravity for a while and a sharp fall to 0.6700 from 0.6900. GBPAUD finding 1.7050 a base now to 1.7150 as AUDUSD holds 0.6700. NZD tumbled from 0.6150 and now testing 0.5985 as I type. GBPNZD basing at 1.9150 and now testing 1.9250.USDCAD: No longer tightly bound (!) and a sharp spike from 1.2950 post-US data and finding further momentum from USD demand and oil price falling but capped at 1.3200 ,amid the USD supply and with oil rallying .

Let's continue to be careful out there.

Interbank rates: 08.28 BST

GBPUSD 1.1500

EURUSD 0.9978

EURGBP 0.8675

GBPEUR 1.1527

GBPJPY 165.11

GBPCAD 1.5197

GBPCHF 1.1095

GBPZAR 20.1125

GBPHKD 8.9819

USDJPY 143.58

EURJPY 143.22

EURCHF 0.9595

EURHKD 7.7924

AUDUSD 0.6716

NZDUSD 0.5985

USDCAD 1.3183

USDCHF 0.9617