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  • Writer's pictureMike Paterson

USD demand prevailing

Friday 23 May 2024

Another week closing with the Greenback still strong and USDJPY up through 157.00 but with the continued JPY supply on the crosses helping to underpin core pairs elsewhere and thefore limited retreats. Yesterday's strong US PMI data added to the USD appetite as bond yields rose and equities fell.

Earlier this morning we had some very soggy UK Retail Sales figures which knocked the Pound lower and data releases today include the preliminary US Durable Goods orders, along with final May reading for the University of Michigan’s Consumer Sentiment index and Canadian Retail Sales. Meanwhile from CBs we’ll hear from ECB’s Schnabel, Vasle, Muller, Nagel, De Cos and Centeno, along with Fed’s Waller. Ukraine/Russia war and Middle East tensions sadly still cast their own very large shadow too.

Equities fell in NY on the hawkish US data tones but have steadied in Asia/early Europe and remain underpinned overall albeit with profit-takers still lurking as the CB second-guessing continues. WTI has held $76.50 this morning after capping at $78.50 amid the ongoing variables. Gold has fallen back through $2350 after capping at $2370 with some understandable profit taking continuing as I've been warning but appetite for the shiny stuff in the dips remains and $2325 holding so far.

GBPUSD: Holding 1.2675 in this morning's extended retreat but capping at previous 1.2700-10 since. EURGBP: Capping around 0.8525-30 still amid the general GBP demand but holding 0.8500 again yesterday and 0.8515 this morning as the ECB/BOE rate cut conjecture and cross flows continue. GBPJPY: Holding 198.80-00 still and rallying this time to 199.50 amid the general JPY supply before capping.

EURUSD: Capping at 1.0860 amid the USD demand returning but holding 1.0800-10 as we continue to range tightly. USDJPY: Support coming in at 156.50 again then 156.80 amid the better-risk JPY supply and USD demand double whammy but capping at 157.15. Some intervention previously up here and large option interest today should help cap but dip demand expected still.

Traders - For more detailed analysis across a larger number of FX pairs including market order flows and options expiries email

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