USD Bruised But Beaten Yet
Crypto Holds….For Now
Well yesterday was not a day for the faint hearted – again!
The SNB and the BOE both raised rates, one surprising the market by its move and one sticking to the script. The BOE acknowledged that inflation is out of control and the market took this to mean more rate hikes might be coming and in turn a real nasty squeeze of GBP shorts took place as the market traded from 1.2040 to 1.2400. The USD followed suit everywhere else with euro trading 1.06 from sub 1.04. Next up was the BOJ and usdyen was sold all day yesterday as the market braced for them following the SNB and changing policy. Overnight they could not have been more different underscoring their low rate policy and even suggesting they could loosen policy if required.
Risk markets were hit yet again and global stock markets look like they have been 10 rounds with Tyson Fury. Crypto actually had a quieter day but bounces from here are hard fought and the almost magnetic draw of 20,000 in BTC will not go away.
So where from here?
Well we remain short of Eur/Chf targeting a move sub parity with a stop loss above 1.04. We are looking to buy cross/yen as the divergence between central bank policy is too stark to ignore. We are underweight crypto holdings looking for one more leg lower to draw us in around 17500 and 850 in BTC and ETH.
The big question on my mind is where does the USD head from here? The fact that so many central banks are showing willingness to raise rates could be the signal that the USD is no longer the only game in town. I am not calling a base on euro/usd and gbp/usd just yet but it is food for thought.
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