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  • richard evans

All eyes on Yen as it weakens further ahead of BoJ meeting

Good morning

 

The US Dollar is weaker against GBP and EUR, they have risen this morning to 1.2495 and 1.0725 respectively.  The big news however come in Yen, which is currently trading at 155.70 against USD and 194.40 against GBP.  We’ve heard little from Japanese officials, perhaps they have given up trying to talk yen higher.  But with the BoJ meeting in the early hours of tomorrow morning I’m surprised we’ve seen so much yen weakness.  Surely BoJ will give a pretty hawkish yen statement, and a rate rise is not out of the question.  Very tempting to buy an overnight USDJPY put, they are not cheap of course, the 155.00 strike costs around 70 yen pips but there is a fairly decent risk/reward to this idea.

 

Weak retail sales data yesterday sent CAD lower, GBPCAD breaking above 1.7025 to hit a high just above 1.7100, having seen a low this week just below 1.6900.  Yesterday evening we saw the results of the latest BoC meeting which showed that members are generally more confident that inflation is heading back towards the 2% target but they are split on rate cut timing, with some preferring to err on the cautious side.

 

US GDP will be seen this afternoon, expected to come in at an annualised 2.5% which would be down on the previous couple of quarters but still showing growth.  The initial jobless claims number will also be of interest given the recent strong US jobs data.  Tomorrows PCE deflator release will also be closely watched.

 

We will have the latest Turkish central bank rate announcement.  Rates are currently at 50% and the feeling is they will keep them on hold there, however the same was said last month and CBRT ended up raising rates 5%.  USDTRY currently 32.56, while EURTRY is just a touch below 35.00. 

 

Liverpool’s title chances were dealt a huge below last night as they lost 2-0 to local rivals Everton.  They are not completely out of it but need both Man City and Arsenal to have a couple of upsets.   Man City play Brighton this evening, can’t see City losing that one, while Arsenal face Spurs on Sunday.  A massive game for both sides.  Can’t say I’m looking forward to it.

 

I was up at the crack of dawn this morning, well actually well before the crack of dawn.  We have a couple of Aussie’s staying with us and I drove them up to the ANZAC dawn service.  Quite nice driving around London at 4am with very little traffic around but it does make sticking to the 20mph and 30mph speed limits on the A4 quite difficult.  I think they appreciated it, fortunately the tubes are running now so they are making their own way back to my place.   I’m sure they’ll need a nap when they get back.  Actually that’s not a bad idea……

 

Have a great day.

 

 

-  09.00 ECB economic bulletin

-  12.00 CBRT rate announcement

-  13.30 US GDP, initial jobless claims, PCE

-  15.00 US pending home sales

-  16.15 ECBs Nagel speaks

-  00.01 UK GfK consumer confidence

-  00.30 Japan Tokyo CPI

-  02.30 AUS PPI

-  03.30 BoJ rate announement

-  04.00 BoJ press conference

 

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