Central Banks in focus again this week
Monday 31 October 2022
A bnsy week ahead with a plethora of CB action starting with the RBA tonight/tomorrow but main focus on the US Fed and BOE on Wednesday and Thursday respectively. 25bps hike from the RBA expected, with 75bps from the Fed and 50-75bps from the BOE.
Meanwhile oil and equity markets making their minds up still, as is gold as the conjecture continues along with the geopolitical risk as Russia cuts Black Sea route grain supply in retaliation for alleged Ukrainian drone attack on one of its boats. Final month-end flows in play today too with moderate USD supply signalled but also some EUR selling. Keep an eye on the 4pm London fix which is a timely reminder that our clocks went back an hour so we're now on GMT in the UK.
Whatever your view/take/analysis one thing is clear, we are experiencing global markets in panic/confused/second-guessing mode the like of which we haven't seen for many a year, indeed decade. The important thing is to identify your preferred entry/exit levels.
GBPUSD: Another rally to test 1.1630 again before capping and now a steady retreat to test 1.1550. I remain a rally seller overall.EURGBP: A decent retreat on Friday amid some EUR month-end supply/ECB fallout but finding support at 0.8570-75 so far. Should remain capped for the moment but I still expect some two-way business. GBPJPY: Finding decent support around 171.00 yet now core pair dip demand and some better risk JPY supply but sellers prevailing at 172.00
EURUSD: 0.9970 capping at the moment amid some general USD demand and month-end EUR supply but should see some good two-way business still post-ECB. Cross flows, risk, Ukraine all in the frame still as well as flows. USDJPY: A good hold of 147.00 on Friday and a rally to 148.27 so far after a dip into 147.70 in Asia. Beware MOF/BOJ intervention. EURJPY: Based at 146.75 after retreat from 147.75 and now posting 147.25 amid better risk and core pair dip demand.Sellers will remain poised. USDCHF: Support coming in now at 0.9960-80 amid the renewed USD demand and as EURCHF remains underpinned with SNB never far away. Sellers will remain poised as the USD and risk jury remains out. 1.0020 capping so far.EURCHF: Holding 0.9920 now with core pair dip demand and SNB still keeping an eye but rally sellers still poised.
AUDUSD: Testing 0.6430 but capping and falling to look at 0.6380 support area before bouncing again. NZDUSD also off its lows but ranging tightly for the moment like AUDUSD amid the variable USD. USDCAD: Capped at 1.3660 this time after a good hold of 1.3575-80 but with month-end USD sell signals the strongest in this pair. Expect two-way business overall still amid the fickle oil and risk variables.
Let's continue to be careful out there.
Interbank rates: 08.50 BST