Greenback sold on softer US inflation data

Thursday 11 August 2022

All change! Following on from Friday's strong jobs and wages reporT came a weaker than expected US CPI reading yesterday on both headline and core basis.Down came the US Dollar led by USDJPY in a retreat that saw it give up a lot of Friday's gains in this ever-fickle world of Forex. If the move post-NFP was over-cooked then so equally one can argue is this, with the data still showing big inflation threats but hey, markets never let the truth get in the way of a good story, until the next one.....

Firmer risk sentiment followed as equity markets rallied on the perceived more dovish tones from the US Fed understandably and still underpinned this morning but DAX wobbling a little as I type. Gold firm still and oil just off its lows but looking vulnerable still. Some JPY and CHF demand notable as markets continue to second-guess.

Please note I shall be taking a long week-end sailing and will not be updating again until Tuesday. It's been a while since I took any time off so a little break is overdue and will be most welcome.

GBPUSD: Capped at 1.2275 this time after finally breaking 1.2250 from 1.2100 but a good retreat to 1.2180 since before bouncing. I will stand poised to sell rallies as we continue to range but with patience a virtue still. EURGBP: A good hold of 0.8415-20 this time where I noted some bids yesterday with EURUSD still finding some decent dip demand but failure above 0.8450. I still think we'll see two-way opportunity. GBPJPY: Now capped around 162.50 after yesterday's USDJPY=led tumble to 161.65.The risk and USD jury remain out and we can expect some fragile price action still after the recent consolidation.

EURUSD: Support yesterday at 1.0200-20 with that large option contract interest helping to underpin and a sharp rally from 1.0250 to 1.0360 post-CPI. Now on the rise again after holding 1.0275 in the retreat with rally sellers including me still poised. USDJPY: Capping at 135.10 prior to CPI and a sharp move lower to 132.00 after as algos then traders triggered a few stops in the usual market knee-jerk. Capped at 133.35 since. EURJPY: Forming a base around 136.60 after falling from 138.40 post-CPI with sellers poised still whenever risk turns. USDCHF: Capped at 0.9500 then 0.9450 amid the softer USD and EURCHF tones but holding 0.9400 with the SNB sdeemingly more than just keeping an eye on things with CHF demand still notable helped by rate hike expectations as I've been warning. EURCHF: Still clinging to 0.9700 by its fingertips with SNB smoothing but some inherent CHF demand still to cap rallies.

AUDUSD: That good support into 0.6940-50 I highlighted provided a good platform for the post-CPI rally to test 0.7100-10 so far. GBPAUD capping at 1.7250 now as AUDUSD rally outstrips GBPUSD but holding 1.7200 so far. NZDUSD testing 0.6430 after the rapid rally from 0.6330 post-CPI. GBPNZD holding 1.9025 in the latest retreat after capping around 1.9100. USDCAD: Capping at 1.2900 then 1.2800 post US CPI but support coming in at 1.2750.

Let's continue to be careful out there.

Interbank rates: 08.32 BST

GBPUSD 1.2223

EURUSD 1.0323

EURGBP 0.8446

GBPEUR 1.1840

GBPJPY 162.05

GBPCAD 1.5605

GBPCHF 1.1490

GBPZAR 19.8250

GBPHKD 9.5272

USDJPY 132.56

EURJPY 136.85

EURCHF 0.9709

EURHKD 8.0466

AUDUSD 0.7096

USDCAD 1.2763

USDCHF 0.9401