More of the same concerns
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Wednesday 03 September 2025
Long-term bond yields are still rising in the UK, US , EZ, Japan and elsewhere and continue to unsettle markets presenting as they do big problems for Central Banks as well, who are caught between slowth growth and stubborn inflation but it's still the UK being singled out for attention given the UK government's huge borrowing requirement.
Gold is posting new record highs above $3545 as the preferred safe haven while US equities have rallied off their lows on the back of better news for Google/tech stocks but UK and EZ markets still looking a little soggy. USDJPY still underpinned but tempered by JPY risk-off demand albeit some cross-pairs off their lows this morning.
The data slate today brings more EZ/UK final PMIs and EZ PPI then JOLTS job openings, Factory Orders and Fed's Beige Book from the US later. CB speakers scheduled are BOE's Breeden, ECB's Lagarde and Fed's Musalem and Kashkari.
WTI oil nudged higher to $65.80 yesterday after holding $64.00-20 but now back testing $65.00 as the jury remains out. Gold has rallied further to post new record highs of $3547 having found support at $3490-00 this time amid the fragile backdrop per my summary above.
GBPUSD: Capping into 1.3420 and a further retreat to test 1.3335 this morning amid the USD demand and general GBP supply with GBPJPY and EURGBP still making an impact. I prefer the rally-sell side still but timing as ever is crucial. EURGBP: Support at 0.8680-85 now and weak GBP-led rally again but capping at 0.8715 so far. Expect more two-way. GBPJPY: Capping at 199.20 helped by the wobbly risk and GBP tones and another retreat to 198.30 before a bounce. Sellers will remain poised but equally dip demand still.
EURUSD: Holding 1.1610 so far after capping into 1.1680 amid the USD demand as the jury remains out. I remain a rally seller as preferred side but timing crucial as always. USDJPY: Support at 148.00 and a rally to 149.15 before capping. JPY cross flows in play as eve. More two-way expected but I prefer rally-sell side still overall albeit with caution. EURJPY: Holding 172.60-70 but capping at 173.20. Expect more two-way amid the general uncertainty.
USDCHF: Support at 0.8020-30 this time helped by some USD demand but capping at 0.8070 amid general CHF demand still. Expect more two-way. EURCHF: Support around 0.9350 still abut equally capping into 0.9380 as CHF demand prevails overall. Expect more two-way.
AUDUSD: A hold of 0.6480 yesterday then 0.6500 so far this morning in the retreat from 0.6530 amid the USD demand and AUDJPY/AUDCHF cross flows. I still prefer the rally sell side as we continue to range. GBPAUD: Support at 2.0480-00 in the extended retreat after capping at 2.0580-00 amid the GBP weakness.
NZDUSD: A hold of 0.5835-40 this time amid the USD but capping at 0.5870. Expect more two-way. GBPNZD: Support at 2.2800 this morning but capping at 2.2870-80 amid the general GBP supply. Expect more two-way.
USDCAD: A hold of 1.3770 this time amid the USD demand but capping around 1.3810-20 helped by firmer oil. More two-way expected amid USD/oil/trade variables.
Let's continue to be careful out there.
Interbank rates: 08.25 BST
GBPUSD 1.3349
EURUSD 1.1614
EURGBP 0.8700
GBPEUR 1.1492
USDJPY 148.97
GBPJPY 198.86
GBPCHF 1.0770
GBPZAR 23.6580
GBPHKD 10.4230
USDCHF 0.8060
EURCHF 0.9363
EURHKD 9.0635
AUDUSD 0.6508
NZDUSD 0.5845
USDCAD 1.3802