USD demand and wobbly risk sentiment greet the new week
Monday 13 June 2022
Friday's US CPI data came in higher than expected at a whopping 8.6% y/y and sparked off more bond and equity selling which is continuing this morning. USD demand notable too but JPY risk-off buying helping to cap cross and core pairs too. UK GDP data out earlier showed a second-consecutive monthly decline and so confirming my bearish view of the UK economy.
Ukraine and inflation remain the very different elephants in the room as we wait on a plethora of Central Bank decisions this week.
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 steady and extended retreat on Friday, and since, as USD demand dominates the landscape and some renewed JPY demand sees GBPJPY lower again too with EURGBP bouncing from 0.8480-00. I remain poised to sell rallies but timing as ever is crucial. BOE meeting on Thursday. EURGBP: Rallying back to post 0.8570 this morning after holding 0.8525-30 and helping to cap GBPUSD again. Expect more two-way business as we wait to see what the BOE do/say but GBP rate hike hawks may end up disappointed, again. GBPJPY: Capping at 166.00 and looking at 164.00 now as wobbly risk returns and USDJPY capped out above 135.00. Some dip demand still expected until Japan intervene on JPY weakness.
EURUSD: Failure to rally back above 1.0650 post-ECB has triggered a test of 1.0450-60 amid the USD demand.USDJPY: 134.50 finally broke but further failure above 135.00 amid more chatter from Japan and softer-risk JPY demand and a retreat back to 134.50 support which is breaking down as I type. The real reversal as/when it comes will be rapid but some dip demand still expected for the moment.EURJPY: A cap at 142.00 and then 141.50 amid the risk-off JPY demand and now testing 140.50. I expect rally sellers to prevail still for the moment.USDCHF: A further push up through 0.9900 amid the USD demand and with EURCHF finding some support around 1.0380. SNB ever watchful and their next meeting on Thursday very much in focus.
EURCHF: Tightly bound for the moment with support around 1.0380 but equally sellers poised above 1.0400 amid the softer-risk CHF demand.
AUDUSD: Finding a cap around 0.7050 this time with AUDJPY selling notable again and now down through 0.7000. GBPAUD capping into 1.7550 in latest rally but holding 1.7430-50 so far. NZDUSD testing 0.6300 as I type after failure above 0.6360 this time amid the USD demand and risk-off NZDJPY supply. GBPNZD finding support at 1.9300 this time after a 1.9400 cap.USDCAD: Supported at 1.2780-00 now helped by the CADJPY selling and as oil price caps again plus USD demand.
Let's continue to be careful out there.
Interbank rates: 08.43 BST