Pound in a whirl
12 October 2022
BOE'S Bailey all over the headlines this morning having last night reminded markets that the BOE support in gilt markets would definitely finish this Friday. Cue rapid falls in the Pound with GBPUSD falling back through 1.1100 to post lows of 1.0923 in Asia not helped by soggy UK GDP data only to rebound t0 1.1025 on FT reports that Bailey had u-turned before falling again as reports were denied as I started to write this .
Consolidation as I type as markets dissect the order in which those comments were actually spoken by Bailey and reported but it looks like a crazy day ahead in the FX casino.BoE's Haskel speaking at 09:00 BST, followed by Chief Economist Pill at 12:35 BST and then Mann at 18:00 BST. Breaking: Haskel says he won't talk about mon pol and GBP buying notable on reports that Government will u-turn on more mini-budget measures. Crazy days indeed.
Comments from US Treasury Sec yesterday seemed to rule out any co-ordinated intervention to stem the USD demand and we've seen the Greenback remain underpinned with USDJPY moving up through 146.00 to post 146.38.Gold, oil and equities off their lows as I type. Fragile geopolitical backdrop still as Ukraine/Russia war continuing.
Market data focus this week remains on the latest US CPI numbers on Thursday but US PPI today the key data from across the pond then FOMC Minutes this evening.
GBPUSD: Lively two-way business per summary above but I prefer rally-sell side still as and when momentum fades. Cross flows still having a big impact too. EURGBP: 0.8760-0.8860 covers it but dropping back through 0.8800 as I type on the GBP rebound. I expect more two-way business to continue with the Eurozone facing issues of its own. GBPJPY: Further drop to test 159.75 this time amid the fragile GBP and risk tones but now 161.50 on the morning's merry-go-round so far. USDJPY still vulnerable to BOJ intervention/USD sentiment turnaround but underpinned into 146.00 now.
EURUSD: Still under pressure of its own amid the general USD demand but holding at 0.9670-80 still for the moment before capping at 0.9725-35 again. USDJPY: Holding above 146.00 now amid the general USD demand but still subject to soggy-risk JPY demand. EURJPY: Capped now a few times at 142.25 after decent hold of 141.50 and better-risk rally. USDCHF: Capping at 0.9980 this time amid some general CHF demand returning but support at 0.9930 with help from the general USD demand. EURCHF: In further retreat amid fragile risk/softer EUR and CHF demand returning but support now at 0.9640-50 with SNB still casting its shadow.
AUDUSD: Capping into 0.6300 still amid the general USD demand but holding 0.6240-50 again.I remain a rally seller as my preferred side. . NZDUSD also still soggy on the USD demand falling but holding 0.5560 in latest retreat so far albeit capped into 0.5625. USDCAD: Up and down we go againl amid the fickle oil and risk variables.
Let's continue to be careful out there.
Interbank rates: 08.03 BST