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  • Writer's pictureMike Paterson

US inflation data in focus

Wednesday 10 May 2023

FX markets still ranging as we wait on today's US CPI data at 12.30 GMT and then the BOE policy decision tomorrow when a 25bps rate hike is bolted in as far as markets are concerned. Lots of ECB rate chatter from their talking heads suggesting hikes still planned but with Stournas now saying they'll be done by year-end. The Euro continues to look soggy after last week's ECB meeting and presser. Risk sentiment generally looking more fragile as I type bringing some JPY demand capping cross and core pairs.

Equities are once again retreating this morning toward yesterday's lows creating those risk-off tones while WTI is also paring yesterday's gains and now capping into $73.50 after a hold of $71.30-50 yesterday. Gold still trading tightly $2020-40 as risk off demand is matched by those natural sellers taking advantage of the current strength. Ukraine/Russia war continues to be the main geo-political elephant in the room with ongoing US/China/Taiwan tensions in the mix too The world remains a fragile place for sure.

Remember as always, focus on the price action and let the algos do the heavy lifting/dropping amid all the second-guessing. The important thing is to identify your preferred risk/reward entry/exit levels prior and be poised to execute.

GBPUSD: A good hold of 1.2580 in yesterday's retrea helped by the EURGBP supply still and some better risk GBPJPY demand and some pips banked. Now capping into 1.2650 helped by GBPJPY supply returning .Re-sells duly placed in the rally and I remain a rally seller as my preferred side but equally dip buying a play. As always it's a questions of identifying the risk/reward levels. BOE tomorrow casting a shadow still ofc. EURGBP: Capping into 0.8700 now and testing 0.8670-80 as the post-ECB slide continues. Expect some two-way business still overall with BOE in focus too. GBPJPY: Capping around 171.20 yesterday and falling to 170.50 amid the generally fragile risk this morning and core pairs capping.

EURUSD: Testing the old 1.0930-40 support area yesterdy and in retreat again this morning after capping at 1.0985. Some pips banked again in the retreat and I remain a rally seller as my preferred side overall. USDJPY: A decent hold of 134.80 yesterday and rally to look at 135.50 amid some better risk but in retreat again this morning as JPY demand returns and pips gratefully banked again from some re-sells. I still prefer to sell rallies/be long JPY but caution still required in these ever-fickle markets.

Interbank rates: 08.35 BST

GBPUSD 1.2624

EURUSD 1.0968

EURGBP 0.8687

GBPEUR 1.1511

USDJPY 135.32

GBPJPY 170.80

GBPCAD 1.6885

GBPCHF 1.1244

GBPZAR 23.7077

GBPHKD 9.8310

USDCHF 0.8895

EURCHF 0.9754

EURHKD 8.5405

AUDUSD 0.6762

NZDUSD 0.6335

USDCAD 1.3387

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