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  
Markets look to Central Bankers

Asian Equities traded higher on Tuesday approaching near two-year highs on Tuesday as USD strength helped exporters...

Global Economic Optimism Continues

Global equities moved higher on Monday as optimism continued to improve on global economic growth. However, USD...

BOJ Monetary Policy Remains Steady

The Bank of Japan maintained their monetary policy on Friday whilst upgrading their assessment of private consumption...


Final Confirmation for a June Rate Hike

The crucial US labour market data for May will be released today, June 2nd at 13:30 BST. It includes non-farm payrolls...

GBP Under Pressure

The Brexit negotiation process is one of the focuses of the upcoming UK election. Although the Conservative Party has pledged a smooth and orderly...

Oil Slumped Post OPEC Extension

On Thursday, OPEC announced that the existing output cut agreement will be extended for an additional 9 months...


USD Bounces From Month Low

Trump administration has presented its 2018 budget plan to Congress last evening. The budget plan calls to slash $3.6 trillion...

Dollar index hit a new low

The dollar index hit a new post presidential election low of 96.95 on Friday May 19th. EUR/USD hit a high of 1.1211...

USD Hit Post Election Low

To date the dollar index has almost given up all of the post presidential election rally...

  


Share: