This is Lost in the Exchange

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Whats in todays copy:

In its May 2024 meeting, the Federal Reserve decided to maintain the current interest rate range, keeping it between 5.25% and 5.5%. This marks the sixth consecutive meeting without any changes, maintaining rates at their highest level in over 23 years.

The Fed is sticking to its goals of stabilising prices by keeping inflation around 2% and promoting maximum employment. Despite concerns about the impact on consumers' purchasing power, they're holding off on rate cuts due to continued economic growth and low unemployment

The DXY bulls took control into Thursday following the meeting, whilst NFP awaited. I expect further DXY bulls to show their hand this week, however pullbacks will be welcomed firstly.

As the market opened last weekend we saw huge volatility in JPY pairs, in what was speculated to be BOJ intervention, putting demand on their currency.

The BOJ have kept rates so low for so long compared to other major economies, their currency has taken the brunt of the capital outflow.

USDJPY has taken a dive throughout the week, as did other JPY crosses and we expect it to continue into this week; although the BOJ decline to answer, the consensus amongst economists is that this will be a multi pronged approach and not a one off.

Therefore long plays on JPY crosses (selling JPY) could result in drastic and sudden losses, especially if there is slippage.

FX options for June may be the best play, or trade shorts carefully on JPY pairs.

Thursday will be the day I expect to see largest volume enter the market. Interest rates are expected to remain, whilst traders turn their attention to Monetary policy statement for clues when the BOE might begin cutting.

With core CPI in march remaining above 4%, It would come as quite the surprise if rates were to fall so soon.

This scenario that rates cuts may not take place until August will be beneficial for GBP this week, given the forecast of a weak DXY, I will be searching for long positions on cable from midweek onwards.

The liquidity lows at 1.2450 - 1.2470 look like an ideal zone to be searching for long entries, if the market can return here at the start of the week.

Don’t go just yet

After a choppy end to the week with violent swings in each direction following NFP, Gold has found key support around $2280 therefore I expect a bullish pullback to take place as long as this remains in place.

The possibility of running unto 2246 remains high, unless we snap lower below $2280.

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Tune in next week…..

Trade Safe