- April 20, 2023

UK CPI remains above 10%

This Daily Digest will cover:

  • UK CPI remains above 10%

  • FX quiet within ranges

  • US yields up but reaching a ceiling?

  • Crypto rocked by large sell order, bounces shallow

 

Not a huge amount of macro or micro developments this week. UK inflation data yesterday surprised to the upside remaining above 10% and becoming an outlier globally. The reasons behind this are a combination of a central bank slow to act, the overhang of Liz Truss’s epic stint and the fact that retailers are still milking(sorry) food price increases. The central bank is being backed into a corner for more rate hikes now, which with the almost unique home ownership culture in the UK will induce more pain. Short term carry benefits for GBP will likely be undermined by poor economic performance going forwards. Despite the recent rally, short GBP/JPY is going to pay off in the medium term in my opinion.

US yields have bounced back but stalled at the top of recent ranges as the USD bounce back has similarly run out of steam. I continue to favour the USD to move slowly lower but have been guilty yet again of hoping for a clear trend to emerge. It will, but the question is when? For now ranges hold and patience is needed (not my strong point).

Crypto took a beating yesterday as a large (circa 20k) BTC order was slammed through the market in a short period of time. The overspill saw the whole market lurch 5-8% lower as short term longs ran for cover. The bounce back has been shallow for now as the market nervously watches for anymore selling coming through. In my mind this is a healthy short term clear out that is getting close to the perfect medium term buy zones.

BTC 28,000 and ETH 1850 are clear levels where we will add to our core longs. Charts for BTC and ETH are below.

BTC/USD hourly chart below highlights the series of lows around 28,000 which I look to buy into.

BTC ETH Chart

 

ETH/USD hourly chart below shows the series oh highs around 1700 and the period of consolidation 1700-1820, hence my buy zone starts ahead of this.

ETH USD

As always, good luck.

Richard Usher
Head of OTC Trading

 

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