No stopping the yen

9 February, 2016

With no key distractions ahead of Yellen’s testimony tomorrow, markets are taking the path of least resistance. For equities, this still appears to be lower, with European equities down yesterday for the sixth consecutive session (looking at the Eurostoxx 50 index), with this being biggest down-move since the first trading day of 2016. The outlook for the global economy remains too uncertain, with the growth dynamics in the US also moderating, whilst the QE being undertaken by the ECB not seen as anything like sufficient to act as a counter-weight to these external forces. As we mentioned yesterday, for FX this has resulted in a change of direction. It’s not about the dollar and the impending rate increases from the Fed this year. After some wobbling, yesterday turned out to be about risk and more pointedly, risk aversion. This could be seen in the further strength seen in the yen, together with weakness in sterling. Having initially joined in the weakening against the dollar, the euro found some buyers in the European afternoon session, putting further weight onto the view that it’s more of a safe haven than funding currency in the current environment.

Fort today, we are seeing a steady to slightly firmer tone to equities at the start of the session, but the turn-around is currently tentative at best. The Japanese 10Y government bond is now displaying a negative yield for the first time ever, whilst the yen has seen a volatile session. USDJPY was initially lower, although some of this strength has been erased for the start of the European session. The data calendar is relatively light, with just UK trade data at 09:30 GMT, leaving markets at the back and call of wider sentiment and clinging onto the weak hope that Yellen may somehow offer some support at her testimony tomorrow.


Source link  
Markets recede from the recent highs

A strong Nonfarm Payrolls caused pressure on the stock markets, reducing the chances of the interest rates lowering by the Fed in the upcoming months...

Gold resumes rally, pushing past $1400

Gold prices resumed a push higher on Monday, as flows into the precious metal continued on improved prospects for easier monetary policy from...

Gold rises as markets slip

Market caution continues to support gold. Quotes of this metal rose to $1337, repeatedly trying to push above this year highs at the 1340-1360 area...


Trump says Brexit should happen

President Donald Trump promised the U.K. a "phenomenal trade deal" Tuesday, on the second day of his state visit to Britain...

Euro and Gold instead of Dollar

Gold rose on Monday to the highest levels since February, reaching $1327 per ounce. In the first hours of the Tuesday trading session, there...

Markets recover after the drop

The markets decline on investors' fears that trade conflicts will drag on and slow down demand, and this dynamic coincided with breaking through important...


Markets pressured by Huawei problem

Alphabet and some other American IT companies have suspended business with Huawei, which is one of the first examples of major consequences for...

The climate is changing rapidly

British people need to fly less, drive electric cars, eat little meat and turn their home thermostats down to 19 degrees Celsius (66 Fahrenheit) in order to rein...

Chinese stocks saw their worst week

Chinese stocks have taken investors on a ride this year. Shanghai and Shenzhen have been the best performing global markets this year, with the Shanghai...

  


Share it on:   or