US inflation data sparks US Dollar demand but jury still out
Friday 11 February 2022
Greenback grabbing eventually the order of the day but it wasn't that straight forward after US CPI data came in higher than expected prompting analysts to raise FOMC rate hike forecasts with 0.5% in March now nailed on and four more of 0.25% to follow in May, June, September and December. Equity markets and Oil making their minds up still after initially rallying but a little wobbly since. Gold treads water amid the uncertainty with Russia/Ukraine never far from the headlines.
This morning we've had some decent UK GDP data which has put a bid under the Pound across the board but rally sellers remain poised when momentum fades as jury remains out on BOE rate hike path.
As ever, a case of not over-analysing or second-guessing but keeping your focus on price action in core and cross-pairs and identify ranges and what levels present value for money. Patience invariably a virtue but don't confuse patience with being stubborn either in entry or exit.
GBPUSD: That option-led support at 1.3500-20 duly held prior to the 15.00 GMT expiry yesterday and then a sharp rally to 1.3640 helped by the usual GBPJPY demand and EURGBP supply before a full retreat back to 1.3520 before a GDP data-led rally to 1.3560 this morning.EURGBP: That decent option interest at the 0.8405 tech support area duly held the retreat before a relief rally to 0.8440 post-expiry only to fall back amid the general EUR supply/GBP demand double whammy this morning and testing 0.8390 (GBPEUR up to 1.1916). Should continue to see two-way business imho but EUR sellers will be poised if risk sentimenr remains firm. GBPJPY: Good support now at 156.75-80 afte failing at the 158.00 offers after the strong rally that saw GBPUSD hit 1.3640 and USDJPY post gains over 116.00.
EURUSD: A 1.1380-1.1500 round trip for the pair in the past 24 hours amid the US CPI fall-out.Large option expiries today helping to cap into 1.150 yesterday. Dovish/cautious ECB tones from Lagarde again helping the retreat as well as the general USD demand. USDJPY: Finding support now around 11580 amid the USD dip demand and JPY supply overall but failure at 116.35 so far. EURJPY: 132.00 resistance now history with dip demand now at 131.80 and 131.60 as risk sentiment/ECB second-guessing continue. USDCHF: 0.9220 support line still and holding again in yesterday's rapid retreat after the equally rapid rally to 0.9295. SNB ever vigilant and some general USD demand helping support still but rally sellers poised too.
EURCHF: Holding 1.0550 now with SNB shadow cast still after rally aellers capped at 1.0610 in yesterday's fun and games.
AUDUSD: Good two-way business yesterday between 0.7170-7240 and now in retreat again to 0.7110 amid the general USD demand and softer risk notes. USDCAD: Huge option interest rolling off today and very much in play prior as I've been warning. Variable oil price and risk not helping to give a lead but general USD demand helping to underpin from 1.2640 dip. Interesting day ahead for sure.
The once-again mighty Shrimpers, and me, travel to Woking tomorrow on the back of another win on Tuesday which now sees us at the heady heights of 13th and dreaming of promotion after staring relegation in the face two months ago. Yes it's Vanarama National League sadly but just got to love the energy around the hallowed Hall right now.
Let's continue to be careful out there in all things. Staying safe must be our main priority still.
Interbank rates: 08.45 GMT