Testing the yen

8 April, 2016

We've seen a modest reversal in the yen overnight after the move below 110 on USDJPY appeared to trigger a wave of stops to below the 108 level as longer-term positions were shaken out of the market. Comments from Finance Minister Aso overnight referred to the undesirability to rapid yen movements, referring to recent movements as one-sided and stating action would be taken as needed. But there was no reference to current levels, so the market does not have a line in the sand on USDJPY. If we measure from the 29th January, then you have to go back to 2010 to see a similar (70 day) period during which the yen appreciated by a similar amount versus the dollar (just under 10%). The yen’s impact on the Japanese economy has diminished over recent years and there is a case to say that the yen is hardly over-valued around these levels given the big weakening move of 2012 to 2014, but given the continued deflationary backdrop against which Japan finds itself, then this move is hardly likely to be welcomed. Still, it’s going to be an interesting few weeks ahead of the next G7 meeting towards the end of May which happens to be taking place in Japan.

Most other things in FX have been pretty steady compared to the yen. Sterling is still finding it tough going, just the Aussie and kiwi underperforming by a greater amount over the past week. The pressure of the upcoming referendum is always in the background and the latest headlines surrounding the PM (and Panama) have probably not helped sentiment at the margins. For today, the Canadian jobs data stand out on the calendar, with the rate seen steady at 7.3% and employment seen rising 10k after the modest decline seen in the data for February. The CAD’s relentless seen to mid-March has stalled of late with USDCAD hovering above the 1.30 level. We’d need to see some fairly punchy numbers to push below this level and put some doubt into the belief that the Bank of Canada can still cut rates late this year (around 30% probability towards year end).


Source link  
Oil at $100: how will it affect economy?

Brent crude has risen about 33 percent this year and is close to the highest in six months. While higher prices due to strong demand typically reflects...

Oil sector will lose 95% by 2050

Companies in the oil and gas sector, including large groups such as Shell, BP and Exxon, could lose 95% of their value by 2050 if governments...

The US economy recession by 2021

In a recent survey, most business economists believe the U.S. will fall into recession by 2021. Days after the market euphoria over a ceasefire in the...


Fed plans some further hikes

The U.S. Federal Reserve raised interest rates on Wednesday, as expected, but forecast fewer rate hikes next year and signaled its tightening cycle is nearing...

Pound to remain in Limbo

The British pound hit its lowest level in over 20 months yesterday before recovering in today's trading session on the back of a decision by British Prime...

Stocks Fall Amid China Worries

European stocks slid, following a retreat in Asia, amid growing concerns about a slowdown in China and policy makers steps to address it. The dollar advanced...


Why $70 is so Important for Brent

October was a brutal month not only for the U.S. IT-Companies. Crude oil prices also had significant and important shifts. After renewing the 4-year highs...

Is the 'extreme fear' over now?

Chinese equities are developing a rebound on Friday, supported by the hopes for progress in China and the US trade negotiations. The telephone...

Dollar is waiting for what Powell says

The U.S. dollar has returned to growth on the comments from the Fed officials about the need of further rates increases this year and next one. At the end...

  


Share it on:   or