It's another roller coaster ride
Tuesday 14 March 2023
The fragile risk sentiment that I said yesterday was still lurking did indeed return with a vengance and the initial carnage for USD and equities/oil became evident yesterday as Europe got underway only to meet with some profit-taking/bargain hunting later before falling again. A lively 24 hours for sure amid all the uncertainty and second-guessing on FOMC and banking sector fallouts.
US CPI data today at 12.30 GMT will be keenly observed for more clues. A reminder that US and Canadian clocks went forward 1 hour at the week-end hence the slightly earlier time as UK/Europe don't change for another 2 weeks. UK jobs/wages data showed no real surprises. Still a tight labour market with 1.1 job vacancies between Dec-Feb, down 50k, with real wages still falling behind. UK Spring Budget tomorrow where the Fin Min will lay out latest fiscal policy and forecasts. ECB decision lurking on Thursday.
Equities steadier this morning after yesterday's rollercoaster ride while WTI is in retreat again after the rally capped at $76.30 followibng the rpid drop to $72.40-50 and fallen to test $73.00 so far as risk tones remain fragile. Gold has found a solid cap at $1915 but equally demand/support now forming between $1890-00 now amid the general uncertainty. Ukraine/Russia war continues to be the main geo-political elephant in the room with ongoing US/China tensions in the mix too.
GBPUSD: Finally capping into 1.2200 yesterday after the hold of 1.2040 and the extended rally amid the USD sell-off but then GBPJPY pushing it higher as some better risk tones returned in an unexpected double-whammy.Been back to 1.2140 since but finding some support there. I remain a rally seller still but continuing with some caution.EURGBP: Capped into 0.8840 amid the GBPUSD demand outstripping EURUSD as markets trimmed expectations of a full 50bps rate hike from the ECB on Thursday and also helping GBPUSD rally but support/bids building at the old 0.8780-85 line now. Expect some more two-way trading as core pairs fluctuate. GBPJPY: A new support line at 160.00 found yesterday after the early panic retreat from 161.50 but a solid rally since to test 163.00 as markets settle and JPY supply returned. Sellers will remain poised though as the uncertainty/fickle sentiment continues.
EURUSD: Holding 1.0650 after the extended drtop from 1.0730 but then another solid bounce to test 1.0740-50 offers/res but holding 1.0680 since as the ECB conjecture adds to the generally fragile market tones. USDJPY: A sharp drop early in Europe to post 132.25 amid the USD supply and JPY risk-off demand double whammy but then found a little support as US markets opened and risk tones improved a little. Good two way business since but nudging higher again in Asia/early Europe as some USD demand return to test 134.25.
More detailed update available by emailing mike@mspfx.co.uk
Interbank rates: 08.38 GMT
GBPUSD 1.2162
EURUSD 1.0704
EURGBP 0.8800
GBPEUR 1.1364
USDJPY 134.10
GBPJPY 163.17
GBPCAD 1.6720
GBPCHF 1.1100
GBPZAR 22.2435
GBPHKD 9.4726
EURCHF 0.9765
EURHKD 8.3357
AUDUSD 0.6662
NZDUSD 0.6217
USDCAD 1.3723
USDCHF 0.9120
