Greenback selling returns
Friday 9 September 2022
RIP Queen Elizabeth II
Long live the King
An immensely sad day yesterday that saw the passing of our revered monarch after 70 years of service and devotion to duty. Thank-you Ma'am, and now take your very deserved rest.
The world moves on as ever, and indeed it was in her final hours as the ECB duly hiked rates by 0.75% as expected but appeared to rule out hikes of this size in the future, adding that the increases will be done within 4-5 months. The usual "Sources" reported after though that further 75bps hikes could not be ruled out. Some Euro selling in the aftermath of the decision and presser but dip demand notable across the board.
USD supply has returned led by USDJPY after more rhetoric from Suzuki, Matsuno and then Kuroda finally twisted the knife a little further for USDJPY bulls. During the ECB presser we also had Fed's Powell delivering a speech which reiterated his hawkish tones overall but added that inflation concerns may be appeased by a period of growth coming in below trend. Not unique amongst CBs these days but in these ever-fickle and myopic markets that's also helped to undermine the Greenback not to mention some profit-taking after a period of sustained support.
Equity markets remain underpinned as does Gold which has found some dip demand again into $1700 to post $1728 but oil still looking soggy, albeit off its lows as the fragile global economic backstory continues.
GBPUSD: Holding into 1.1450 in yesterday's retreat and then 1.1500 and now posting 1.1630.. Cross flows, notably GBPJPY and EURGBP still having an impact. EURGBP: Holding 0.8650 yesterday in the post-ECB retreat where we also had that decent option interest that I warned about here and Twitter but failing above 0.8700 in the rally so far. Two-way business expected still up here as jury remains out after the recent 20-month highs. GBPJPY: Capped at 166.30 again amid the USDJPY retreat despite better risk tones but support coming in at 165.15 this time.
EURUSD: Lows of 0.9930 which my man @fxcharttopper had identified as decent support with good bids behind at 0.9920.A decent rally since helped by the USD supply. A few options in play again today. USDJPY: Capped in 144.50 and then 144.00 before the rhetoric-led retreat with some profit-taking/stop-losses amid the general USD supply and now posting 142.20. I've been warning that the move higher was over-extended and I still think it is. but not convinced yet though that the trend has turned.EURJPY: Support now at 143.50 after capping at 144.75 on the USDJPY retreat. Expect some two-way business still.USDCHF: Still looking soggy and capping into 0.9750 this time and now testing 0.9580 on the extended retreat amid the softer USD tones and the natural CHF demand I've been highlighting with EURCHF capping at 0.9720 too.EURCHF: Testing 0.9660 yesterday and heading that way again as I type after capping at 0.9720 still helped by some general CHF demand.
AUDUSD: A good hold of 0.6740 yesterday and a strong rally to 0.6870 so far amid the USD supply. GBPAUD retreating from 1.7050 in a straight line as AUDUSD rally outstrips GBPUSD and now 1.6925. NZD holding 0.6060 and another pair straightlining amid the USD supply to post 0.6140. GBPNZD capped at 1.9000 this time and posting 1.8925 as I type.USDCAD: Capped around 1.3100 this time amid the USD supply and now retreating further through 1.3000 with oil off its lows.
Let's continue to be careful out there.
Interbank rates: 08.10 BST