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  • richard evans

Minor tweaks to BoJ YCC fail to support yen

Good morning


For this week, US data releases will be one hour earlier at 12.30 or 14.00 london time due to the clock changes.

In addition, FX option expiries will be 14.00 london time, not the usual 15.00 london time.


We saw a little USD weakening yesterday afternoon, GBPUSD traded up to 1.2165 and EURUSD to 1.0625, while USDJPY slipped from 149.80 to 148.80 in a move that smelled very much of intervention, or perhaps just another indication of how nervous the market is particularly ahead of the BoJ meeting.


USDJPY stayed around the 149.00 level overnight until the Boj announcement, they seem eager to continue with negative rates and made only a very marginal tweak to YCC, adjusting language around the 10 year yield cap to make 1% a reference point rather than a fixed ceiling. In light of nothing more substantial from BoJ, yen weakened sharply and as I type USDJPY is back up to 150.30. Unless we see anything firm on the intervention front then I see little reason why USDJPY can’t continue its push higher towards those Oct 2022 highs near 152.00. Elsewhere in Asia, China PMIs were weaker than forecast, China continue to set the USDCNY fix in the 7.17s despite the pair trading above 7.30.


Back to GBPUSD and EURUSD, although GBP is holding its gains vs USD, it lagged behind EUR, with EURUSD now 1.0630. This puts GBPEUR at 1.1440, the lowest level we’ve seen since early May. This morning sees both GDP and inflation numbers from EU, the market isn’t looking for anything particularly stunning here, although the better EUR performance could be put down to forecasters raising their estimates for EU GDP from yesterdays -0.1% to 0% that we see this morning. If GDP doesn’t live up to those new expectations we could see GBPEUR ticking up once again.


Gold had a little push higher again yesterday just breaching $2000 in the afternoon before slipping back to support around $1900. This morning it is back up to $1998 and think it will continue to find support while the Middle East crisis goes on. Reports that Israeli forces have had large battles with Hamas in Gaza, it is difficult to see any way this will be over quickly. Still the hope that tensions don’t escalate in the region. The World Bank warns oil prices could hit $150 if the conflict intensifies.


So I’m not entirely sure what happened to October, it seemed to come and go very quickly. It’ll be 2024 before we know it so make the most of November when it comes. I will be avoiding the November practive of growing a moustache, longer term readers will remember that mine tends to grow dark in the centre but lighter (ok, greyer) on the edges which leaves me looking like an ex-German leader who no one wants to ever be associated with.


It'll be a little drizzly here according to the forecast but it looks as though we may miss the worst of storm Ciaran here that looks set to hit the country from Wednesday. I’m not a fan of rain, but I’m also not really a fan of Halloween, particularly trick or treating. A bit of rain might persuade any kids who were thinking of venturing out looking for sweets to stay in the comfort of their own homes. Every cloud and all that….


- 10.00 EU GDP, HICP

- 12.30 US employment cost index

- 12.30 CAD GDP

- 13.45 US Chicago PMI

- 14.00 US consumer confidence

- 17.00 ECBs Nagel speaks

- 21.00 RBNZ financial stability report

- 22.45 NZ unemployment

- 01.30 AUS building permits

- 02.45 China caixin manufacturing PMI


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