FOREX: Accelerated Fed Timeline Undermines Week's USD Rally
Aug-01 18:09
- A rush forward in Fed rate cut expectations for September (and through the rest of 2025) followed a soft NFP print Friday, with pricing of a 25bps cut shifting from 10bps to over 20bps very swiftly - dragging the USD with it. The resultant USD downdraft tipped the USD Index well through both the Thursday and Wednesday lows. With payrolls growth weaker than expected in July, another huge downward revision in both June and May, the building pressure on the FOMC to move on rates will build - evident in the dissenting statement issued by Bowman and Waller Friday.
- Volatile markets Friday extended the spell of JPY uncertainty, with the currency rallying sharply against all others. USD/JPY has traded a wide range this week, and the correction lower in USD/JPY tips the price back below the 200-dma. Importantly for bulls, support at 147.63, the 20-day EMA, and 147.63, the 50-day EMA, remain intact.
- Focus in the coming week shifts to the BoE rate decision, at which anything other than a 25bp cut would be a major surprise. Markets are currently pricing a 93% probability of that outcome, and guidance is also widely expected to be unchanged with the "gradual", "restrictive" and "careful" buzzwords all likely to remain.
- Into the decision, a bearish theme in GBPUSD remains intact, despite the Friday bump higher. This week’s sell-off has resulted in a breach of the bear trigger at 1.3365, the Jul 16 low. The break confirms a resumption of the downleg that started Jul 1 and highlights a clear breach of the trendline drawn from the Jan 13 low.
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US TSY FUTURES: BLOCK: Sep'25 2Y Sale
Jul-02 18:08
- -5,000 TUU5 103-27.75, sell through 103-27.88 post time bid at 1359:20ET, DV01 $192,000.
- The 2Y contract trades 103-27.75 last (-.88)
US: FED Reverse Repo Operation
Jul-02 18:04
RRP usage slips to $237.307B this afternoon from $245.530B yesterday, total number of counterparties at 45. Usage had fallen to $54.772B on Wednesday, April 16 -- lowest level since April 2021 - compares to yesterday's (July 1) $460.731B highest usage since December 31.
EURGBP TECHS: Bull Cycle Accelerates
Jul-02 18:00
- RES 4: 0.8781 2.236 pro of the Mar 3 - 11 - 28 price swing
- RES 3: 0.8738 High Apr 11 high and a key resistance
- RES 2: 0.8694 High Apr 14
- RES 1: 0.8670 High Jul 02
- PRICE: 0.8655 @ 16:21 BST Jul 2
- SUP 1: 0.8521/8486 20- and 50-day EMA values
- SUP 2: 0.8459 Low Jun 11
- SUP 3: 0.8407 Low Jun 4
- SUP 4: 0.8356 Low May 29 and the bear trigger
The trend condition in EURGBP remains bullish and this week’s gains together with today’s acceleration, reinforce current conditions. Moving average studies are in a bull-mode position - highlighting a dominant uptrend. 0.8648, 76.4% of the Apr 11 - May 29 downleg, has been pierced. A continuation higher would open 0.8738, the Apr 11 high and a key resistance. Support to watch lies at 0.8521, the 20-day EMA.
