Japanese Yen rises cautiously after Kuroda speech

6 September, 2016

US Dollar trades lower on Monday as weak August NFP diminished odds of the FED rate increase in September. Greenback index which tracks the currency against six other majors fell 0.27% to 95.61 afterВ US employment data posted on Friday showed the number of new jobs created in August was less than projected – 155K vs. 180K expected. Unemployment rate didn’t change from July and averaged 4.9% although missing analysts’ consensus at 4.8%. Wages rose slower than expected, rekindling concerns if the pace of inflation growth corresponds to the FED targets.

September probability of the rate hike decreased to 21%, while December odds fell to 41.1% vs. 49.4% predicting FED will stay put in the policy change.

Defensive assets, including precious metals, gained appeal with bullion adding 0.14% on Monday, Japanese Yen rising half a percent and Swiss Franc trading 0.23% from the previous session close.В In Japan, Labor cash earnings in July rose 1.4% comparing to the same period in last year, 1.0% higher than expected, adding to evidence that consumer inflation in the country may be on the rising path. Yen also received support from hawkish Kuroda stance on its speech at Kyodo News event.В The policymaker said that BoJ has a play for more easing “in three dimensions – quality, quantity and the interest rate – and other new ideas should not be off the table”. Such a decisive address from the head of the Japan Central Bank will likely kerb the appetite of the Yen bulls, helping the currency to retreat from excessive strengthening. Local stocks cheered Kuroda comments, local stock gauge Nikkei 225 gained 0.66%.

The pound extended gains on Monday as business activity in service sectors improved significantly in August, reports show. Markit PMI in the service sector rose to 52.9 from 47.4 points in July, posting the biggest monthly change in 20 years. Composite PMI rose to 53.6 points, beating forecasts. GBP/USD advanced to 1.3372 level paring gains later.

Oil prices soared 4% on the news that Saudi Arabia Oil Minister wants to make an “important statement” on the G20 meeting in China on Monday.В Both WTI and Brent benchmarks rose 3.99% and 3.82% respectively as traders expect Oil officials will put an end to the excessive crude oil output which will rebalance on the market. Despite a sharp upturn in oil prices, traders failed to pass optimism to the Russian ruble, which rose only 0.5% against US Dollar.


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