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  • Mike Paterson

Some signs of fatigue as markets wait on ECB

Thursday 9 June 2022

USD demand and JPY supply have taken a little breather after the recent heady moves and helping to cap cross pairs and therefore core pairs too. Equities are lower this morning but remaining firm overall as do gold and oil prices albeit with the occasional wobbles still. Variable risk sentiment overall with Ukraine and inflation remaining the very different elephants in the room.


The ECB decision today is expected to announce the end of its net asset purchases and to confirm that policy rate lift-off will start in July but with how much? 0.5%? Lagarde’s presser at 12.30 GMT will be watched closely for further guidance as always. Markets are pricing in bigger hikes than the ECB have signalled in recent times so risk could be to the downside. European bond yields also remain underpinned for the moment.


As ever, deal on fact not second-guessing. Be ready with your preferred levels/strategy, place orders and let the algos do the heavy work. Discipline is key as always but equally hesitation can often ruin a great idea.


GBPUSD: A good cap above 1.2550 yesterday helped by the USD demand but equally holding 1.2480-90 again so far. Pips banked in the retreat again after some re-sells placed in the rally. I remain poised to sell rallies but timing as ever is crucial.

EURGBP: Rallying back above 0.8540 this time after holding 0.8500 support area. More two-way business expected as ECB looms.Caution advised.GBPJPY: Finally capping at 168.75 in yesterdays cntinued rally and a decent retreat to look at 166.75 as USDJPY capped out too. As I asked yesterday?"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." Not over fierce just yet but 200 pips was a decent reversal so I hope the warning helped.


EURUSD: Failure into 1.0750 yesterday and 1.0720 since but holding 1.0690 in the latest dip. I remain a rally seller as my preferred side overall as the ECB fun and games looms ever large.USDJPY: New highs and a cap around 134.50 with traders, including me, front-running 135.00 to go short and avoiding any queues Current trend still seems underpinned and holding 133.50 but some pips gratefully banked. The real reversal as/when it comes will be rapid. EURJPY: A further surge to 144.00 but capping there amid the general JPY demand and with traders trimming positions ahead of the ECB. Should find some decent demand into 142.00.USDCHF: General USD and EURCHF demand still supporting this pair too and now testing 0.9800. SNB ever lurking in the dips still but having their work done for them atm. SNB meeting next week in focus. EURCHF: Now holding 1.0450 and pushing up through 1.0480 amid the general CHF supply but rally sellers will continue to lurk in expectation of potential rate tightening. ECB the risk today.


AUDUSD: Finding a cap into 0.7220 this time with AUDJPY selling notable but holding 0.7160 so far and some pips banked along the way. GBPAUD holding 1.7400 still but equally struggling to hold gains above 1.7480. NZDUSD testing 0.6435-40 again but a failure above 0.6460. GBPNZD finding support at 1.9380 this time. USDCAD: Supported at 1.2550 again helped by the CADJPY selling but still capped by firmer oil price. I still prefer rally sells for the moment.


Let's continue to be careful out there.


Interbank rates: 08.54 BST

GBPUSD 1.2500

EURUSD 1.0700

EURGBP 0.8561

GBPEUR 1.1680

GBPJPY 166.83

GBPCAD 1.5765

GBPCHF 1.2257

GBPZAR 19.0123

GBPHKD 9.7531

USDJPY 133.50

EURJPY 142.84

EURCHF 1.0477

EURHKD 8.3445

AUDUSD 0.7167

USDCAD 1.2577

USDCHF 0.9791



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