FOMC decision looms ever closer
Wednesday 14th December 2022
Yesterday I warned that we could expect plenty of volatility around the US CPI data and that was duly delivered with a slightly softer reading sending the algos racing, equities sharply higher and the Greenback in rapid retreat.
We've seen some over-stretched moves with plenty of stops triggered along the way and price reversals in both the US Dollar and equities as we wait on the main event at 19.00 GMT today when the US Federal Reserve tells us its latest plans. 50bps rate hike still expected but with points towards only 25bps hikes in the first few months of 2023. I expect cautious tones from Powell and as always we'll find out exactly what has been priced in as the volatility unfolds.
Gold and oil both finding support in the retreat after their latest rallies where gold touched $1825. UK CPI data earlier came in a little softer ahead of the BOE tomorrow but is unlikely to have too much bearing on their decision but will provide some comfort to their cautious tones with these current inflation levels still far too high.
GBPUSD: A good hold of 1.2250 then finlly broke up through 1.2300 in convincing fashion post-CPI data before finally capping into 1.2450 and retreating to test 1.2350 where it has since held. I remain poised to re=sell but caution required of course as looking underpinned still overall for the moment. EURGBP: Support line at 0.8580 broke but once again the other recent line of 0.8560 re-appearing but still capping at 0.8610. GBPJPY: A cap at 169.20-30 again and a solid fall led by the USDJPY supply outstripping others but equally now holding the old 167.00 support line as core pairs both ranging again ahead of FOMC.
EURUSD: A decent hold at 1.0540 this time and a sharp break of 1.0580 resistance line triggering stops on its way to 1.0670. Now underpinned around 1.0620. USDJPY: A good cap between 137.50-80 then support/bids at 134.50 helping to support the overstretched retreat but equally capping at 135.75 now. Talk of BOJ review next year giving the pair another nudge lower as I sign off. Kuroda ateps away in March. EURJPY: Capping at 145.00-30 again before rapid slide to 143.50 and now finding sellers 144.25. Expect more two-way as markets second-guess. USDCHF: Capping into 0.9380 again and a rapid fall to 0.9220-30 support area post-CPI than a cap at 0.9300 with traders looking at SNB tightening/hawkish tones tomorrow.Some EURCHF dip demand helping to support again. EURCHF: A hold at 0.9840-50 this time but capping into 0.9900 amid hawkish SNB expectations and we continue to range.
AUDUSD: Good support around 0.6750-60 then the rapid rise through 0.6800-20 to 0.6880 then support coming in at 0.6820 on the dip.NZDUSD capped above 0.6500 but holding 0.6430 in the retreat. USDCAD: Capping at 1.3620 on the post-CPI retreat and oil rally but holding 1.3520 a few times with large option interest nearby.
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.
Interbank rates: 08.53 GMT