Monday 27 November 2023
We were expecting illiquid markets on Friday as US markets and traders enjoyed the Thanksgiving holiday and we saw US bond yields rise but the Greenback fall again helped by preliminary estimates of month-end FX hedge rebalancing flows providing a larger than average USD sell-signal. Tomorrow sees the Spot trading date but, as always, we'll keep an eye on the daily 16.00 London fixes as well as other flows into month-end.
The ongoing Middle East back-story sadly continues meanwhile and casts its own shadow over markets but still not driving prices. Ignore at your peril though. This morning BOE Governor Bailey said it will be difficult to get UK inflation back down to 2% and too early to talk about rate cuts which is no surprise but helping to underpin the Pound generally.
Equities rallied in NY again but fell equally have fallen again in Asia before gains in early European trading then a dip once more in a repeat of recent patterns. WTI has seen a dip into $74.75 after capping at $77.00 then $76.00 with global demand concerns continuing. Gold has found a base at $1995 this time and finally broken up through $2000 to test $2015-20 amid the USD supply and uncertain risk sentiment as the jury remains out.
GBPUSD: Remaining underpinned for the moment amid the USD supply and general GBP cross demand but still tempered by some GBPJPY supply. Testing 1.2625 this morning after holding 1.2550-60 on Friday. I remain poised for rally sells when momentum fades but caution still required for the moment. EURGBP: Support at 0.8670 this time in latest retreat amid the GBP demand again but now capping at 0.8690-00 where we also have option interest today. More two-way expected amid the core pair fluctuation/CB rhetoric. GBPJPY: Basing at 187.50-60 amid the GBP demand and testing 188.60 but now back below 188.00 as I type. Sellers remain poised amid MOF/BOJ interevention fears and fragile risk overall.
EURUSD: Support around now around the old resistance at 1.0920-30 and posting 1.0960 amid the latest USD supply. I remain a rally seller overall still as we continue to range tightly. USDJPY: Capping at 149.70 still but holding 148.80 in the latest retreats. I remain a rally seller as preferred side overall at these still elevated levels.
For more detailed analysis across a variety of pairs email mike@mspfx.co.uk
Interbank rates: 08.36 GMT
GBPUSD 1.2606
EURUSD 1.0941
EURGBP 0.8677
GBPEUR 1.1521
USDJPY 149.08
GBPJPY 187.95
GBPCAD 1.7195
GBPCHF 1.1113
GBPZAR 23.6177
GBPHKD 9.8232
USDCHF 0.8807
EURCHF 0.9636
EURHKD 8.5270
AUDUSD 0.6596
NZDUSD 0.6085
USDCAD 1.3641
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