Ranging with Central Banks in focus
Thursday 8 December 2022
Yes folks, it seems that markets are still pre-occupied by the raft of CB action next week and jumping on hot coals again with the US Fed on Wednesday the prime focus. The Bank of Canada yesterday hiked by 50bps as expected.
Liquidity is notably thinner but we're ranging essentially on the Greenback overall albeit a tad softer with bond yields falling as traders second-guess the Fed. Equities have had another wobble and oil has fallen further but gold is consolidating a little still and been up to $1788. China's COVID relaxtion measures have analysts out on whether that's a positive or negative for sentiment and the globl economy at large. Geopolitical risk in Ukraine still lurking too.
GBPUSD: The old support line of 1.2150 back in place for the moment amid some general USD softness but equally 1.2235 providing the cap. Good two-way business whatever your bias and I remain poised to re=sell. EURGBP: Support line at 0.8600 now and back up through 0.8630 again.I expect the two-way business to continue as jury remains out on both currencies and outlook. GBPJPY: A good cap at 167. again in yesterday's rally but equally now holding 166.30-50 as core pairs both find dip demand.
EURUSD: A decent hold at 1.0480-85 this time but capping around 1.0525 again after one brief look at 1.0550.Should still see some mixed business. USDJPY: A solid hold of 136.25 with sellers prevailing at 137.25 to keep a lid on things for the moment. I expect more two-way business into FOMC. EURJPY: Holding 143.30-50 now after capping at 144.50 as we continue to range albeit with a slighlty firmer bias as risk sentiment settles and core pairs find some dip demand.USDCHF: Capping at 0.9425 after a hoild of 0.9360 in yesterday's USD supply-led retreat with traders still looking at SNB tightening/hawkish tones next week. EURCHF ranging tightly for the moment but still underpinned. SNB ever-vigilant. EURCHF: A hold at 0.9850 then 0.9875 this time but capping at 0.9900 amid hawkish SNB expectations and we continue to range.
AUDUSD: Good support around 0.6670-80 again and then 0.6700 but equally the old line at 0.6740 still providing good supply/res and I remain a rally seller as my preferred side/strategy. NZDUSD now capped at 0.6380 after yesterday's break up through 0.6350 but holding 0.6320 in the dip as the USD jury remains out. USDCAD: Underpinned still and now that line coming in at 1.3650 on the softer oil price story but equally 1.3700 proving step too far. BOC sprung no surprises with a 50bps hike and cautious tones.
Interbank rates: 08.53 GMT