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  • richard evans

Japan, did they or didn't they intervene?

Good morning

USDJPY traded up to 150.00 yesterday afternoon following after a strong JOLTS US job openings number. It was only there briefly before the market was hit with some US$9bio of selling which took the pair down to 147.30 in a straight line. It did recover but gains were capped to 149.30 or so and it currently trades just below 149.00. GBPJPY followed suit, trading from 181.30 to 178.10, now 179.70. Japan are so far refusing to confirm whether they intervened, we might have to wait until the release of its currency data to confirm that, but it is difficult to think what else it could be.

Japan intervened in USDJPY on a few occasions around this time last year and didn’t always confirm they had done so. If it was intervention, they may be a bit unhappy that the fall in USDPY was not more significant. With the US dollar so strong it will be difficult for Japan to act against the market trend. However it does serve as a warning to Yen sellers that they cannot have it all their own way.

RBNZ kept rates on hold overnight which helped AUDNZD push up from lows around 1.0655 to break back above 1.0700, now 1.0720. As with many central banks the commentary was that although rates are unchanged, it is likely they will stay at higher levels for longer than previously anticipated. RBNZ do not see inflation returning to target until the second half of 2024. There are still some who think RBNZ will raise rates again this year despite the central bank previously suggesting they were finished with rate increases. The weakness in NZD we are seeing suggests RBNZ will stick to their guns and not raise rates further.

US ADP employment numbers are released today, regular readers will know this is seen by some as a decent indicator for nonfarm payrolls, although this correlation is often disputed. Anyway, after the strong JOLTS data yesterday, a strong ADP reading today will reinforce the idea that the US labour market is still buoyant. This is great news for them of course, and the US dollar remains firm. Equity markets however don’t like it at all, the threat of possibly higher rates, and the old ‘higher for longer’ idea, sent US markets lower. There remains a big question over whether Fed will raise rates again this year but what is clear is that we shouldn’t expect much in the way of rates cuts through 2024.

In other news, the sound recording of the VAR decision in Spurs v Liverpool has been released. It does seem to show that VAR made the correct decision, that is the Liverpool goal was onside and should have stood, but the confusion was around whether the on-field decision was offside or onside. I’m thinking VAR assumed the on-field decision was a goal and confirmed the decision was correct, when in fact the on-field decision was offside.

Mistakes will be made despite the technology available. It is quite likely that every team will, through the season, get their fair share of good and bad decisions, just as they did before VAR was introduced. Not much consolation for Liverpool fans on this occasion though. As a Spurs fan I’ll take the points but it was a bit disappointing we had to have an incorrect offside decision and a late own goals to beat a Liverpool team that had just nine players on the pitch.

Although the weather has been pretty good recently, apart from the odd severe rain shower, it does seem to be decidedly colder in the mornings and evenings. OK, its not exactly freezing I know and we are in October, but it is getting to the point where we will have that usual family debate of whether the heating should go on or whether its simply time to change out of shorts and t-shirts and into long trousers and jumpers. I know where I stand on the matter, but I am the one paying the bills. This weekend temperatures are forecast to be around the mid-20s. There is no way the heating is going on any time soon.

Aside from the US ADP numbers today we have various PMIs from both sides of the pond to contend with, plus EU retail sales this morning. Several central bank officials speaking as well. Sunak speaks at the Tory conference, he’s been in for a rough time recently but no doubt we’ll get one of those awful standing ovations that last several minutes which makes everyone feel rather uncomfortable. There isn’t a lot for any political party to applaud at the moment.

- 09.00 EU services PMI

- 09.30 UK services PMI

- 10.00 EU retail sales, PPI

- 11.15 UK PM Sunak speaks

- 12.40 ECBs de Guindos speaks

- 13.15 US ADP employment

- 14.45 US S&P composite PMI

- 15.00 US services ISM, factory orders

- 15.00 ECBs Panetta speaks

- 15.25 Feds Bowman speaks

- 17.00 ECBs Lagarde speaks

- 01.30 AUS trade balance

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