The yen rollercoaster

27 July, 2016

Today will be about waiting for the Federal Reserve decision this evening. Of course, there is no tangible chance of a change in rates, so the focus will be on the shifts in the statement and on their assessment on the outlook for policy. The last meeting saw the uncertainty surrounding the UK’s Brexit vote holding the Fed back. That’s now passed, even if the result was not as expected, so the focus is back on the domestic economy and whilst the latest data showed headline employment rebounding, the longer-term measures of momentum on the US labour market still suggest that activity is slowing.

Overnight, the rollercoaster that is the yen has been the main focus, with the move to 104.00 level on USDJPY seen yesterday reversed overnight as reports filter through with more details of the anticipated fiscal stimulus. It was the initial announcement on this earlier this month, in the wake of the Upper House elections that sparked the initial weakening of the yen. Reports also suggest that this will be approved by the cabinet on 2nd August next week. With this confirmed, this could reduce the chances of further stimulus from the BoJ at the end of this week. Expectations are for a further cut of rates into negative territory, together with a further increase in the monthly expansion of the monetary base, but the BoJ could choose to keep its power dry and give fiscal policy the chance to work.

Before then, UK GDP data is the main focus at 08:30 GMT. The economy is seen expanding 0.5% QoQ. This covers the second quarter and the period during which the economy was supposedly held back by the uncertainty of the Brexit vote at the end of June. With a monetary easing largely priced in, the data would need to be substantially different vs. expectations if it is to have an impact on the currency.


Source link  
CB Monetary Policy Unchanged

Thursday saw the latest Monetary Policy Committee (MPC) report from the Bank of England. The BoE stated that further modest increases...

No Surprises as Fed Raises Rates

The Federal Reserve, as expected, raised its benchmark interest rate by a quarter of a percentage point, to a range of 1.25% to 1.5%. The latest hike...

CB meetings dominate the week

With no impactful economic data releases on the calendar today, the markets are focusing on a plethora of Central Bank meetings scheduled...


No Surprises from BoC & ADP

In an unsurprising move, the Bank of Canada decided to hold its benchmark lending rate at 1%, after two small hikes earlier in 2017. The BoC stated...

Moderate Gains for USD

On Monday, the US Commerce Department released Factory Orders data for October, indicating that the continued strength in the Manufacturing...

OPEC Extends Output Cuts

On Thursday, OPEC (Organization of Petroleum Exporters) and non-OPEC producers led by Russia agreed to keep output cuts until the end of 2018...


US Economy Expands Faster Than Predicted

Data released on Wednesday showed that the US economy expanded at its quickest pace since 2014 in Q3. The US Commerce Department said that...

Political Turmoil in Germany Hurts EUR

The EUR lost ground against many of its peers on Monday on news that Chancellor Angel Merkel’s efforts to form a coalition government had collapsed...

USD Suffers on Subpoena News

The Trump Administration is back in the spotlight with news of a report that Special counsel Robert Mueller’s investigators have issued a subpoena...

  


Share: