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USD demand returns as jury remains out.

Friday 28 October 2022

No change in monetary policy from the BOJ this morning and with another promise of more easing if necessary has seen USDJPY help lead the Greenback higher again to post 147.35 after a hold this time of 145.80-00. Kuroda said rapid yen moves are negative and undesirable for Japan's economy making business planning difficult but made no comment on FX interventions.


Yesterday had seen some more USD weakness by and large with moderate month-end sell signals in the mix too but US yields began to base albeit not racing higher amid some mixed US data. EURUSD failed into 1.0050 again after the ECB decision to raise 75bps as expected and offering little of note in the presser so the jury remains out on the extent and duration of further hikes. They also claimed QT was not discussed. Villeroy this morning has said there's no obligation of another 75bps hike in December. GBPUSD had also shown signs of fatigue above 1.1630 and AUDUSD similarly capped between 0.6480-00 so the clues were there. Markets had perhaps got carried away on Fed pivot talk again as I warned yesterday but we will find out more when they deliver their next hike/rhetoric on Wednesday. BOE will be following up on Thursday.


Oil and equity markets making their minds up still, as is gold as it continues to decide exactly what role it serves in these ever-fickle markets.

GBPUSD: Another rally to test 1.1630-50 amid the initial softer USD tones before capping and now a steady retreat to 1.1515.EURGBP: Finding support at 0.8600-10 per my tweets yesterday but capping at 0.8650, also as I warned on Twitter. I still expect some two-way business with the Eurozone facing issues of its own. GBPJPY: Finding decent support around 169.00 yet again and now testing 170.00 again amid USDJPY rally and some better risk JPY supply.

EURUSD: Good two-way business post ECB with 1.0050 capping again and then 0.9970 finally breaking. Cross flows, risk, Ukraine all in the frame still as well as USD flows.USDJPY: A good hold of 145.80 on yesterdays retreat from 146.30 and a one-way ticket to 147.50 amid USD demand and BOJ lack of action but jury out still on how long it lasts. Dip demand expected still. EURJPY: Based at 145.50 anbd now posting 146.75 amid better risk and core pair dip demand.Sellers will remain poised between 147.00-50. USDCHF: Support coming in now at 0.9880 amid the renewed USD demand and EURCHF remains underpinned with SNB never far away. Sellers will remain poised as the USD and risk jury remains out. EURCHF: Holding 0.9860-80 now with EURUSD dip demand but rally sellers still poised.


AUDUSD: Testing 0.6400 again after capping at 0.6480 helped by USD demand..NZDUSD also in retreat amid the USD demand and heading down into 0.5780-00 again. USDCAD:Capped at 1.3625 this time and a notable retreat into 1.3500 at the 4pm London fix.Finding support amid USD demand returning though.

Interbank rates: 08.56 BST

GBPUSD 1.1515

EURUSD 0.9940

EURGBP 0.8627

GBPEUR 1.1589

GBPJPY 169.62

GBPCAD 1.5667

GBPCHF 1.1459

GBPZAR 20.8810

GBPHKD 8.9741

USDJPY 147.30

EURJPY 146.34

EURCHF 0.9888

EURHKD 7.7436

AUDUSD 0.6415

NZDUSD 0.5803

USDCAD 1.3609

USDCHF 0.9955



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