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  • Mike Paterson

All eyes on the FOMC

Wednesday 15 June 2022

Lots of volatility again in the past 24 hours as markets continue to second-guess the US Federal Reserve decision tonight at 18.00 GMT then the Powell presser at 18.30. A rate hike of 0.75% now bolted in so anything less will disappoint the hawks but may help to soothe equity markets. Either way traders and algos will also be wanting to see what the latest further trajectory looks like and then start second-guessing all over again

We've seen equity and commodity dip demand again in Asia and a little USD supply but the Greenback understandably remains firm overall. Ukraine and inflation remain the very different elephants in the room as well as we wait on FOMC and further CB decisions this week too with SNB and BOE tomorrow and BOJ on Friday.ECB's Lagarde is speaking at the LSE today from 16.00 GMT.

As ever, deal on fact not second-guessing. Be ready with your preferred levels/strategy, place orders and let the algos do the heavy work. Discipline is key as always but equally hesitation can often ruin a great idea.

GBPUSD: A further extended retreat to break 1.2000 for the first time in over 2 years amid the USD and EURGBP demand and risk-off GBPJPY supply. I remain poised to sell rallies but timing as ever is crucial. BOE meeting tomorrow in focus as well as FOMC today.EURGBP: Rallying further to test 0.8720 after holding 0.8650 this time and helping to cap GBPUSD again. A straight line higher and a bigger move than I expected as markets price in a more dovish BOE tomorrow in the wake of recent data and ECB intentions already known.GBPJPY: Capping at 163.00 in the bounce from 161.20 this time amid all the risk-off JPY demand and GBP supply double-whammy. I've said before that this pair is heavily traded by hedge-funds as a risk management tool and we've certainly seen some unwinding finally this week.

EURUSD: A solid hold of 1.0400 again and adding to some general EUR demand elsewhere but sellers, including me, still poised into 1.0480-00. USDJPY: A good hold of 133.4.50 this time amid the general USD demnd and another look above 135.00 and but capping in Asia. The real reversal as/when it comes will be rapid but some dip demand still expected for the moment.All eyes on FOMC. EURJPY: Finding a base at 140.50 amid the general EUR demand helped by dip buyers on core pairs but sellers still poised on softer risk sentiment as/when it returns each time.USDCHF: The big 1.0000 level now broken amid firmer USD and EURCHF tones again. SNB ever watchful and their meeting tomorrow very much in focus although no action expected until September. EURCHF: Support around 1.0350 amid general EUR demand and now a decent rally to 1.0470 as I type after a break of 1.0430 triggering a few stops. SNB meeting tomorrow.

AUDUSD: Finding a cap around 0.6960 this time with USD demand notable again but holding 0.6850 so far. GBPAUD capping around 1.7475 in latest rally and now testing 1.7375-80 this time. NZDUSD finding a good hold of 0.6200 still amid the latest variable risk and USD tones. GBPNZD finding support at 1.9250 this time. USDCAD: Supported at 1.2900 now helped by the general USD demand and oil price capping again. Seems to be on a bit of a mission higher still but FOMC in focus and 1.3000.

Let's continue to be careful out there.

Interbank rates: 05.50 BST

GBPUSD 1.2007

EURUSD 1.0429

EURGBP 0.8683

GBPEUR 1.1515

GBPJPY 162.20

GBPCAD 1.5345

GBPCHF 1.2050

GBPZAR 19.3265

GBPHKD 9.4259

USDJPY 135.05

EURJPY 140.84

EURCHF 1.0431

EURHKD 8.1858

AUDUSD 0.6905

USDCAD 1.2964

USDCHF 1.0003

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