More of the same but for how much longer?
Wednesday 8 June 2022
USD demand and JPY supply at pace with yield-led differential still notable with cross and core pairs underpinned.Equities are off their highs but remain firm as do gold and oil prices albeit with the occasional wobbles. Variable risk sentiment overall with Ukraine and inflation remaining the very different elephants in the room.
ECB rate/policy decision tomorrow very much in focus. Meanwhile more dovish talk from the BOJ this morning illustrates the difficult situation they're very much still in.
GBPUSD: A good hold of 1.2480 yesterday helped by the ongoing GBPJPY demand but equally failing back on the rally into 1.2600 as USD demand continues overall. I remain poised to sell rallies but timing as ever is crucial. EURGBP: Failing above 0.8540 this time holding 0.8500 support area so far. More two-way business expected as ECB looms. GBPJPY: Now Underpinned at 166.50-80 on the continued JPY supply and rallying above 167.50. When does it get overbought? Not just yet it would appear so I'll continue to watch and wait. Reversal as/when it comes will be fierce.
EURUSD: Failure into 1.0720 yesterday and 1.0700 since as USD demand prevails but holding 1.0680 in the latest dip. ECB shadow being cast too.USDJPY: 133.00 the latest resistance area to concede in the extended rally to now post fresh 20+-year highs of 133.70 amid the yield-led JPY supply/USD demand double whammy. Current trend still seems relentless but reversal as/when it comes will be rapid. EURJPY: A further surge to 142.90 as I type amid the general JPY supply with a base now around 142.00. ECB tomorrow. USDCHF: USD demand/yield differential still supporting this pair too and testing 0.9780. SNB ever lurking in the dips still but having their work done for them atm. SNB meeting next week could be interesting given current rhetoric and market flows. EURCHF: Now holding 1.0400 and pushing up through 1.0440 amid the general CHF supply but rally sellers will continue to lurk in expectation of potential rate tightening.
AUDUSD: Finding a cap into 0.7240 this time but holding 0.7175 so far. GBPAUD holding 1.7400 now but equally struggling to advance too far. NZDUSD testing 0.6440 again after another failure above 0.6480. GBPNZD finding support at 1.9400 this time but sellers at 1.9500.USDCAD: Supported at 1.2525-30 now where I noted bids yesterday amid firmer USD but capped still by firmer oil/CADJPY demand. I still prefer rally sells for the moment.
Let's continue to be careful out there.
Interbank rates: 08.57 BST