Jury remains out despite Powell's best hawkish efforts

Thursday 15 December 2022

Last night the FOMC duly hiked interest rates by 0.5% and Fed Chair Powell did his best to convince markets that there is no pivot lower in sight just yet. The algos acted differently though and we saw some equity market rally and USD supply only to get what we can best call a reality check in Asia and early Europe with equities turning lower, risk sentimnent softening and the Greenback making solid gains. Jury remains out would be fair to say.

This morning the SNB have also hiked by 50bps as expected with repeated tones of intervention when necessary and more rate hikes possible but nothing we didn't lready know and we've seen some CHF selling albeit still contained in recent ranges. Norges Bank have hiked 25bps as expected and we now wait on the BOE and ECB to deliver their expected 50bps rate hikes. As always the devil will be in the detail and once again we'll find out exactly what has been priced in as the volatility unfolds and the info diseccted from the headlines.

GBPUSD: A good hold of 1.2350 yesterday then up to test 1.2450 again in the FOMC aftermath .Now capping at 1.2400 and testing 1.2300 as I type. Good two-way business whatever your bias. I remain poised to re=sell but caution required of course as we wait on BOE. EURGBP: Support line at 0.8580 held again and now posting 0.8630 as GBPUSD retret outstrips EURUSD. Good two-way action still as I've been expecting/highlighting and now waiting on BOE/ECB. GBPJPY: A cap at 168.50 being tested again as I type as core pairs find some dip demand after holding the old 167.00 support line then 167.80-00.

EURUSD: A decent hold at the 1.0620 that I highlighted but being tested again as I type after the sharp break higher to look at 1.0700 in the FOMC aftermath. Rinse n repeat. Awaiting ECB. USDJPY: A good base at 134.50 again post FOMC and once again proving my point of ignoring the noise and identifying ranges. I expect more two-way business. EURJPY: Capping at 145.00-30 again for the moment after the gold of 144.30-50 amid the variable risk and USD impact. Expect more two-way as markets second-guess. USDCHF: Capping into 0.9300 in the past 24 hours and again post-SNB again after holding the 0.9220-30 support area again. Some EURCHF dip demand still helping to support again but CHF demand to continue overall. EURCHF: A hold at 0.9840 again but capping into 0.9900 post-SNB and we continue to range. Good two-way pips still.

AUDUSD: Good support around 0.6750-60 in sight again as I type after the multiple cap at 0.6880 and some good two-way pips whatever your bias.NZDUSD capped into 0.6480 now and testing 0.6375 as I type amid the USD demand. USDCAD: Capping into 1.3620 again then holding that 1.3520 line again in the post-FOMC retreat .

Let's continue to be careful out there.

Interbank rates: 08.48 GMT

GBPUSD 1.2326

EURUSD 1.0622

EURGBP 0.8615

GBPEUR 1.1602

GBPJPY 168.18

GBPCAD 1.6705

GBPCHF 1.1477

GBPZAR 21.3610

GBPHKD 9.5973

USDJPY 136.45

EURJPY 145.00

EURCHF 0.9860

EURHKD 8.2735

AUDUSD 0.6788

NZDUSD 0.6395

USDCAD 1.3588

USDCHF 0.9288