GBP had rallied hard on Thursday and the initial move during Asia was continuation, taking cable to highs circa 1.1200. The swings in GBP were large, after 1.12 was a 70-odd point pullback before another retest of that big figure. As I post GBP/USD has dropped back under 1.1100 in mere minutes. Its straddling 1.11 as I post and showing no signs of abating in volatility heading into Friday Europe/UK/US time.

USD/JPY was a mover also, not to the same extent. US highs circa 144.80 held again here during the timezone after the pair rose from around 144.30. We saw improving data from Japan today (see bullets above), and promises of further fiscal support for the economy.

Speaking of data, the focus was on Chinese PMIs for September:

  • the official China manufacturing Pmi inched barley into expansion, while the alternative survey private Caixin manufacturing PMI remaind in contraction
  • the official services PMI fell to a 4 month low, still in expansion – construction activity gave the PMI a lift from the recent infrastructure policies

Central bank-speak was from Mary Daly, head of the San Francisco Federal Reserve branch. Daly said a deep recession was not needed nor warranted. That qualifier, ‘deep’, is a bit of a worry. Fed thinking looks to me like they are seeing a recession as locked in.

3-minute candles for cable:

gbp wrap 30 September 2022