Wednesday 7 August 2024
Moves in the Yen continue to dominate the landscape with two-way business notable yesterday and JPY demand notable again into Asia opening as equities retreated at the NY close. Then came comments from BOJ Deputy Governor Uchida saying that the current market volatility would prevent further rate hikes before then later slightly softening that stance to say if volatility changes the BOJ view on prospects for achieving price goal then that will influence decision on rate hike path. He added that there was no gap in views between him and Governor Ueda.
Cue an initial rapid rise from 145.00 to 147.90 but falling back into 146.50 in early European trading on the revised comments and with greater liquidity levels. The Nikkei 225 jumped to 35800 but then also retreated into 34750. Both have found dip buyers since and we can expect the two-way to continue which will influence other core pairs through the cross flows. BOJ rate hikes are certainly not the only game in play but these myopic and thin liquidity Summer markets don't play to the usual rules.
NZD was given a boost by higher than expected inflation figures. Today's slate brings little of note again on either the data or CB speaker front .
Equity markets globally have rallied in the wake of the Nikkei jump after retreating into the NY close but capping again as European trading gets underway albeit with dip buyers poised. WTI also rallied from $71.80 amid the better risk tones yesterday but has also found itself in retreat this morning but holding $72.00-20 so far. Gold is still making its mind up and has found some dip demand into $2380 this time but with rallies capped into $2400 now.
GBPUSD: Capping at 1.2720-30 but equally finding support into 1.2675 amid the GBPJPY volatility. EURGBP: Holding 0.8580 after posting fresh recent highs of 0.8615 as GBP lags behind EUR amid all the cross flows elsewhere. Still underpinned overall for the moment. ECB/BOE rate cut conjecture contines but these moves are still all about risk flows. GBPJPY: The rollercoaster rides continue unsurprisingly amid the USDJPY volatility. Capping at 188.00 after the rally from 184.00 but a retreat into 185.50 as I type.
EURUSD: Tightly bound still but now at the lower 1.0905-35 level amid all the cross flows elsewhere. USDJPY: Once again lots of two-way business and hence volatility yesterday even before Uchida's comments and found a base at 144.30 in early Asia after capping at 145.40. Was still ranging until the comments caused the rapid rally to 147.90 from 145.00 and now finding support at 146.00-10 in early European trading as Nikkei finds support at 34500.Expect more volatility.
Traders - For more detailed analysis across a larger number of FX pairs including market order flows and options expiries email mike@mspfx.co.uk
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