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  • Mike Paterson

Markets wait on next clues

Tuesday 13 September 2022

RIP Queen Elizabeth II

Long live the King

USD supply still notable this morning amid better risk sentiment generally as markets wait on US CPI data today and once again second-guess the Fed. Equity markets remain underpinned and rallying again this morning with Gold ranging tightly and Oil off its lows but the fragile global economic backstory continues.

UK jobs data headlines looked ok with the best unemployment rate since 1974 but look beneath and all is not quite as it seems. Don't forgetthat due to the period of national mourning now being observed in the UK, the September 2022 meeting of the MPC has been postponed for one weeK to 22 Sept. US headline CPI data at 12.30 GMT is expected to show a fall of 0.2% MoM given the fall in oil prices but core inflation in services remaining strong and should not divert the FOMC off its currently hawkish path.

The second-guessing and conjecture remains in these ever-fickle markets so don't over-analyse but be ready with your preferred levels/strategy. Look for appropriate risk verus reward. Discipline is key as always but equally hesitation can often ruin a great idea.

GBPUSD: Holding 1.1650 now amid the USD supply/GBPJPY demand and some EURGBP supply returning.Patience a virtue still but I prefer the rally-sell side and ever-poised. Cross flows, notably GBPJPY and EURGBP still having an impact.EURGBP: Capped at 0.8720 on a general EUR reality check but holding 0.8645-50 in the retreat so far albeit sellers poised at the familiar 0.8680 line. GBPJPY: Tightly bound as the risk and USD juries remain out. Softer USDJPY tones helping to cap but risk-on JPY supply helping to support.

EURUSD: Finding decent support at 1.0100 now amid the USD supply after yesterday's retreat from near 1.0200 and some pips banked, but finding sellers above 1.0150 currently as some EUR cross supply prevails. Rally sellers including me still poised. Some option interest in play.USDJPY: Capped at 143.00 now on the general USD supply but finding support into 142.00 helped by the risk-on JPY supply . Still not convinced the bullish trend has ended so expecting more 2-way business. EURJPY: Support now around 144.20 in the retreats but sellers prevailing above 144.50 as we range tightly. Expect some two-way business still.USDCHF: Still looking soggy, now capping at 0.9550, and testing 0.9500 on the latest retreat amid the softer USD tones and the natural CHF demand but SNB will be keeping an eye on matters.EURCHF: Testing 0.9630 again this morning after capping at 0.9660-80 as USDCHF retreats and the Euro gets a little reality check after yesterday's rally.

AUDUSD: A good hold of 0.6865 in Asia has provided a platform for a rally to test 0.6900 amid the USD supply/AUDJPY demand. Option interest up here tomorrow. GBPAUD retreating from 1.7050 this time to 1.7000 as AUDUSD remains underpinned for the moment.NZD holding 0.6125 after yesterday's failure above 0.6150. GBPNZD holding 1.9000 well as NZD ranges tightly and GBPUSD has a little spike.USDCAD: Tightly bound for the moment but capped at 1.3000,amid the USD supply and with oil rallying but support at 1.2960.

Let's continue to be careful out there.

Interbank rates: 08.44 BST

GBPUSD 1.1714

EURUSD 1.0142

EURGBP 0.8657

GBPEUR 1.1549

GBPJPY 166.71

GBPCAD 1.5187

GBPCHF 1.1142

GBPZAR 19.9140

GBPHKD 9.1220

USDJPY 142.32

EURJPY 144.34

EURCHF 0.9641

EURHKD 7.8978

AUDUSD 0.6885

NZDUSD 0.6137

USDCAD 1.2972

USDCHF 0.9505

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