Friday 8 December 2023
Yes folks, in a week of US jobs data we have the key NFP release today at 13.30 GMT amid the chaos caused by the rapid appreciation in the Yen that we've seen in the past 24 hours with a major re-adjustment under way on interest rate divergence. After a final black-hole drop into 141.50 in NY yesterday we've seen USDJPY back to 144.40 as markets re-assess and correct what has been an over reaction given the current information while showing how fickle and myopic these markets are.
Minds still being made up on the Greenback and firmly focussed on Central Bank rate cuts in 2024 as inflation eases but expectations rising that the BOJ will act to tighten policy at next week's meeting or the following one but that's not exactly what Ueda said yesterday so the conjecture will continue. The ongoing Middle East back-story sadly continues meanwhile and casts its own shadow over markets but still not driving prices.
Equities rallied in NY before retreating into the close but off their Asian/early European lows as I type with the jury still out. WTI capped at $70.50-60 this time but holding $69.00 as the retreat resumed amid global demand concerns and still looking soggy overall albeit lifting a little to test $70.00 this morning. Gold trading tightly again for the moment in $2020-35 as traders pause for thought after this week's heady times.
GBPUSD: Holding 1.2540-50 again yesterday but still capping into 1.2600 with both rallies and falls tempered by the GBPJPY two-way volatility. I remain poised for further rally sells when momentum fades.EURGBP: Support at 0.8560-65 again but capping into 0.8585 again too this time. Jury still out but CB rate divergence in play for the moment and hence pressure on the Euro.
GBPJPY: Capping at 181.50 before and since the accelerated move lower to 178.60 in NY amid USDJPY tumbling and the JPY demand in general. Sellers remain poised but all more finely balanced now given the shakeout.
EURUSD: Support now around 1.0770 for the moment after capping at 1.0815 then 1.0800 and retreating on the general EUR supply still plus some USD demand returning. I remain a rally seller overall. Options in play. USDJPY: Capping at 145.00 then the black hole move to 141.50 and rapid bounce to 143.50 before a hold of 142.50 amid the JPY demand and now capping at 144.40 as I type. I remain a rally seller as preferred side overall at these still elevated levels. I hope the ongoing steer has served you well but some caution required now after this shakeout.
For more detailed analysis across a variety of pairs email mike@mspfx.co.uk
Interbank rates: 08.43 GMT
GBPUSD 1.2568
EURUSD 1.0788
EURGBP 0.8583
GBPEUR 1.1648
USDJPY 143.92
GBPJPY 180.85
GBPCAD 1.7050
GBPCHF 1.0995
GBPZAR 23.6896
GBPHKD 9.7842
USDCHF 0.8741
EURCHF 0.9433
EURHKD 8.3876
AUDUSD 0.6605
NZDUSD 0.6148
USDCAD 1.3580
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