US Fed rate cut talk sends Greenback lower

Tuesday 4 June 2019

The US$ selling we saw yesterday turned into a more sustained move as US yields tumbled amid talk/speculation of interest rate cuts by the US Fed in December and 2020 but one possibly as early as July 2019. Fed's Bullard added his own call for a cut and that threw some further fuel on the fire but his comments have largely been ignored in recent times so it just shows how fickle these markets are.

I've warned of global economic downturn for a long while now and central banks being stuck between a rock and a very hard place. The ECB deliver their own rate announcement this Thursday but meanwhile it's the Euro that's seen the majority of buyers with markets being seemingly caught short.

GBPUSD has been up to post 1.2687 but it's been a struggle with some GBPJPY and GBPCHF risk-off selling plus renewed EURGBP demand amid the general Euro love-fest.EURGBP staged a decent rally after holding 0.8820-30 support and remains underpinned at 0.8890 (GBPEUR sellers 1.1245)  as I type.GBPJPY remains on the back foot on the risk-off sentiment with USDJPY also falling below 108.00 but has found support into 136.50 again.

I remain GBP bearish overall and continue to rally-sell as my preferred strategy amid all the uncertainty/indecision including Brexit. I repeat no change to this view for the foreseeable future. Dip buyers will still expect to find better value for money the lower we head but that's still not happening in any big fashion at the moment.

EURUSD has rallied strongly on the USD supply but has this morning failed into the 1.1280 offers with a hint of USD demand returning after what, to me, seems an over-cooked move at the moment.USDJPY duly continues its recent steady retreat with Yen demand overall still notable but buyers at 107.80-85 holding the fall so far.

USDCHF has also retreated amid the EURUSD rally but still supported by some EURCHF dip demand with the SNB ever casting their shadow.

AUDUSD found a bid on the USD supply and with the market having totally factored in an RBA rate cut of 0.25% which was duly delivered earlier this morning. Little in the statement but now waiting on Lowe's presser at 09.30 GMT and the pair remains tightly bound as per my earlier tweet.

USDCAD has fallen back below 1.3500 to breach support at 1.3450 and 1.3430 amid the general USD supply. Bids building now around 1.3420 and 1.3400 then 1.3380 with offers building at 1.3460 then then 1.3480, 1.3500 and 1.3550.

Fickle Forex markets ever prevailing so be ready with your entry/exit levels and orders as always.

Have a good day out there one and all.

Interbank Rate 08.17 BST

GBPUSD   1.2676

EURUSD   1.1267

EURGBP   0.8888

GBPEUR   1.1249

GBPAUD   1.8150

GBPCAD   1.7015

USDJPY   107.97

USDZAR   14.4203

EURJPY   121.67

EURCHF   1.1181

EURHKD   8.7365

GBPJPY   136.85

GBPZAR   18.2530

GBPHKD   9.8277

AUDUSD   0.6984

USDCAD   1.3424

USDCHF   0.9924