ECB in focus
Thursday 14th April 2022
USD supply notable after markets picked up once again on the US core inflation data coming below expectations and we're now seeing bond yields falling back. Equities remain supported but off their highs this morning from latest rallies. Gold and oil both off their lows and looking underpinned still.Long Easter week-end approaching but we have the latest ECB policy announcement today to evaluate first. Dovish/cautious tones expected so risk to the upside I guess. Meanwhile the atrocities in Ukraine sadly continue.
USDJPY has broken down through the key 125.80 and then 125.20-30 amid the general USD supply but holding 125.00 so far. Other core pairs also remaining in recent ranges. Yesterday the BOC hiked rates by 0.5$ and while the tones weren't that hawkish Gov Macklem said they would be prepared to be "forceful" in future moves if needed. Plenty of chat in Asia about PBOC rate cuts approaching.
For new and older readers alike I repeat my view that it's still a case of not over-analysing but keeping your focus on price action in core and cross-pairs.Continue to identify ranges and what levels present value for money. Algos will continue to knee-jerk price action on the variable headlines. Discipline is key as ever.
GBPUSD: A strong rally amid the general USD supply and helped again by EURGBP weakness which saw 1.3050-60 broken and finally 1.3100 triggering further demand through 1.3120-25 offers before finally capping into the next tranche at 1.3150. Patience a virtue given the solid rise but re-sells duly placed. I remain a rally seller overall while keeping an eye on EURGBP and GBPJPY as always. EURGBP: Still on the back foot but holding 0.8290-00 in the retreat so far as we wait on the ECB. I would still expect some more dip demand down here but equally sellers poised in the bounce. GBPJPY: Support at 164.00 now as core pairs continue to find dip demand. Sellers poised though when risk appetite/bond yields softens.
EURUSD: A decent rally from 1.0810 amid the USD selling and finally chewed through the 1.0880-00 offers but sellers prevailing around 1.0925 so far as we wait on the ECB. USDJPY: Based around 125.00 so far after the USD supply-led retreat but failing around 125.50 as the jury remains out. EURJPY: Support at 136.40 now with EURUSD rally outstripping USDJPY retreat but failing at 137 so far as we wait on ECB. USDCHF: Failure into 0.9360 amid the EURUSD rally but holding 0.9320 as EURCHF rallies back yet again to 1.0200 with the SNB casting a shadow still. EURCHF: A break back above 1.0150-60 saw a solid rally to 1.0200 but capping ahead of ECB with the SNB lurking in the dips. Rally sellers still poised though.
AUDUSD: 0.7440 area holding the latest retreat after sellers prevailed into 0.7480. Should see good two-way business still so take your pick. NZDUSD broke down through 0.6780 to test 0.6760 but sellers capping the rally at 0.6830 so far.USDCAD: 1.2540 now providing a base after the retreat from 1.2680 amid the softer USD tones and BOC rate hike with oil underpinned too for the moment. Two-way business still expected amid all the uncertainty. Some option interest in play again today
As we look at trading opportunities it's even more important not to over analyze but trade the price action with discipline and patience. I can help with this in my 1-2-1 sessions and now is the time, more than ever, to get on board with those if you haven't already done so. Contact me to take advantage of currently reduced prices.
Let's continue to be careful out there in all things. Staying safe must be our main priority still. I shall send a report tomorrow but away Monday. Enjoy your weekend everyone.
Interbank rates: 08.23 BST