1 Minute Market Rundown – 2nd August 2022

Position Unwind Continues
Pelosi Visit to Taiwan Undermines Asian Stocks
Data Light Until Friday

A quiet start to the week and month as in the main the themes from last week continued. Stocks continued to rise yesterday and the Usd long positions widely held this year saw more unwinding as people become more fearful of a peak in interest rates. The main mover continues to be Usd/Jpy and one wonders how far a move needs to be before a correction counts as a reversal. Nine big figures lower is more than a flesh wound and we now approach 130 where as a week ago everyone had eyes on 140. Interestingly Euro and Gbp have made only slow marginal gains during the same period so either positioning here is lighter or the continued issues faced by the Eurozone and the UK are still firmly in focus. I suspect it is a combination of the two and I grow happier with my medium term downside options in Eur/usd.

The mood soured somewhat overnight as the Us stock market gave back its gains late in the day and finished in the red. Pelosi is visiting Taiwan today which has ignited concerns that China will react and the last thing we need now is more US/China tension. Without wanting to appear flippant this must be 476th time this fear has been written about in the markets since I have been trading and the stakes are simply too high for either side to go further than posture so I treat it as a sideshow until it isn’t.

Crypto has followed the general sell off without being spectacular and it remains hard to see a range break before Friday. My buy levels from yesterday remain the zones I am looking at to continue to play the recent moves.

Today sees a couple of fed speakers including the ultra hawk Bullard. He will be watched closely for any signs of softening in his tone, but honestly the man thinks rates should be 5% so I suspect he may give the markets a reminder that rates are going up further in an economy that is heading south. It remains an environment where I find it hard to fall in love with risk assets just yet.

Richard Usher – Head of OTC Trading

Richard Usher

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