FX Board: JPY crosses rip higher — pear-shaped kiwi
Cable was lifted today after the Bank of England held off from cutting rates. Photo: iStock
By John J Hardy
Key developments in FX today
- JPY crosses continued storming higher on strong risk appetite and anticipation of new policy initiatives from Japan, but EURJPY and GBPJPY are looking overdone, with the latter precisely testing the 38.2% Fibo today of the huge selloff from the May-31 highs.
- Sterling jumped higher on the Bank of England's failure to cut rates, but the action quickly faded and bears/longer term sellers have re-emerged at technically interesting levels, particularly in GBPUSD just ahead of the 1.3500 level.
- Kiwi was crushed lower as the Reserve Bank of New Zealand announced an economic assessment for July 21 that has the market anticipating dovish guidance risks. This has combined with momentum divergence, particularly in AUDNZD, but also in NZDUSD to a degree to suggest that the kiwi's days as an outperformer are over.
- Gold continued to correct and the bulls will need to find support either at $1,308/oz or at the ultimate range support at $1,300/oz to keep the structural bullish case intact. Silver, meanwhile, has maintained a very sideways profile during its consolidation - a promising sign thus far for bulls.
Is USDJPY signalling a trend change?
To the downside, the first level of note is 1.3000.
GBPUSD was unable to strike beyond 1.3500
— Edited by Martin O'Rourke
John J Hardy is head of forex strategy at Saxo Bank