Sterling Hit by BoE Bailey; Aussie Suffers Amid Copper Price Decline
| Action Insight Daily Report 5-12-23 |
Sterling Hit by BoE Bailey; Aussie Suffers Amid Copper Price Decline |
In the wake of comments from BoE Governor Andrew Bailey suggesting a potential pause in rate hikes, Sterling has taken a sharp downward turn overnight. Despite the expected 25bps hike yesterday, Bailey's interview with Bloomberg TV sent ripples through the market, causing a broad sell-off of the Pound. With UK GDP data on the horizon, Sterling's performance remains under scrutiny. However, unless GDP figures significantly exceed expectations, it's more probable than not that Sterling will conclude the week as one of the weakest performers. Meanwhile, Australian Dollar the worst performer for the week so far, taking a hit from the drastic fall in Copper prices and growing concerns over China's economy. Euro is trailing closely behind Sterling as the third weakest currency. New Zealand Dollar is also losing ground following RBNZ's inflation expectations survey. As risk aversion grows in the commodity sector, Yen, Dollar, and Swiss Franc are gaining traction. From a technical perspective, the unfolding scenarios in both EUR/USD and USD/CHF markets will be key areas of focus in the coming days. Should EUR/USD see a firm break of 1.0908 support, it would confirm a short-term top and suggest that the pair is already in correction to its entire uptrend from 2022 low of 0.9534. Concurrently, if USD/CHF can decisively break 0.8993 resistance, it would confirm short-term bottom at 0.8818, indicating a potential correction of its entire downtrend from 2022 high at 1.0146. If these scenarios materialize, we could see more upbeat Dollar outlook for the remainder of Q2. In Asia, at the time of writing, Nikkei is up 0.87%. Hong Kong HSI is down -0.13%. China Shanghai SSE is down -0.40%. Singapore Strait Times is down -0.83%. Japan 10-year JGB yield is down -0.0187 at 0.373. Overnight, DOW dropped -0.66%. S&P 500 dropped -0.17%. NASDAQ rose 0.18%. 10-year yield dropped -0.042 to 3.397. |
GBP/JPY Daily Outlook Daily Pivots: (S1) 167.55; (P) 168.66; (R1) 169.47; More... GBP/JPY dropped notably overnight but recovering after hitting 167.95 resistance turned support. Intraday bias stays neutral first. Further rally could still be seen with 167.95 intact. On the upside, break of 172.30 will resume larger up trend to 100% projection of 148.93 to 172.11 from 155.33 at 178.51. Nevertheless, firm break of 167.95 should confirm short term topping, and turn bias back to the downside for deeper pull back to 165.40 support and possible below instead. | |
| GMT | Ccy | Events | Actual | Forecast | Previous | Revised |
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| 22:30 | NZD | Business NZ PMI Apr | 49.1 | 48.1 | | 23:50 | JPY | Money Supply M2+CD Y/Y Apr | 2.50% | 2.70% | 2.60% | 2.50% | | 03:00 | NZD | RBNZ Inflation Expectations Q2 | 2.79% | 3.30% | | 06:00 | GBP | GDP Q/Q Q1 P | 0.10% | 0.10% | | 06:00 | GBP | GDP M/M Mar | 0.00% | 0.00% | | 06:00 | GBP | Industrial Production M/M Mar | -0.10% | -0.20% | | 06:00 | GBP | Industrial Production Y/Y Mar | -3.70% | -3.10% | | 06:00 | GBP | Manufacturing Production M/M Mar | -0.10% | 0.00% | | 06:00 | GBP | Manufacturing Production Y/Y Mar | -3.80% | -2.40% | | 06:00 | GBP | Goods Trade Balance (GBP) Mar | -17.5B | -17.5B | | 12:30 | USD | Import Price Index M/M Apr | 0.30% | -0.60% | | 14:00 | USD | Michigan Consumer Sentiment Index May P | 63 | 63.5 |
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