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  • Writer's pictureMike Paterson

US debt talks still in focus

Tuesday 23 May 2023

Some encouraging news yesterday from the Biden/McCarthy US debt ceiling talks have been well received by markets and given the Greenback another lift but with June 1st as the deadline there will still be concerns understandably and some softer risk-tones notable again this morning as European trading gets underway.

Lots of flash PMI data out today from Europe (coming in mostly softer than expected as I type) and the US which will keep traders second-guessing while at 09.15 GMT in London BOE's Bailey and other MPC members will testify to UK lawmakers.

Equities are in retreat this morning after yesterday's better risk-tone rally but still underpinned overall with WTI also falling back into $71.75 after its own rally capping at $72.50 this time as gloobal economic growth concerns continue. Gold is in retreat to look at $1950-55 again amid the generally better risk sentiment despite increasing tensions in the Ukraine/Russia war which continues to be the main geo-political elephant in the room and the world remains a fragile place for sure.

GBPUSD: Failure at 1.2470 yesterday and re-sells duly placed once again. Still ranging overall as we now dip through 1.2400 helped by some softer risk GBPJPY supply returning. I remain a rally seller as my preferred side. Watch out for any Bailey testimony reaction. EURGBP: Holding 0.8690 this time and now breaking through 0.8700 as core pair sentiment flutters around still. Expect some two-way business still overall. GBPJPY: Capping at 172.60 amid softer risk tones and now looking at 171.50. Rally sellers ever-poised but dip demand expected too for the moment still.

EURUSD: Failure into 1.0820-30 again, re-sells duly placed and testing 1.0780 again this morning. I remain a rally seller as my preferred side. USDJPY: Despite a rapid wobble yesterday from 138.60 support prevailing at 138.00 and still looking underpinned overall amid the general USD demand. Capping at 138.85 though and some re-sells made before pips banked in the latest retreat into 138.35-40. I still prefer to sell rallies/be long JPY overall but ongoing caution/patience required as I've been warning.

Interbank rates: 08.32 BST

GBPUSD 1.2405

EURUSD 1.0792

EURGBP 0.8700

GBPEUR 1.1493

USDJPY 138.46

GBPJPY 171.75

GBPCAD 1.6763

GBPCHF 1.1148

GBPZAR 23.8793

GBPHKD 9.6518

USDCHF 0.8987

EURCHF 0.9712

EURHKD 8.3928

AUDUSD 0.6627

NZDUSD 0.6266

USDCAD 1.3522

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