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  • richard evans

Ueda helps push USDJPY back towards intervention territory

Good morning

Back in the office after another extremely pleasant trip down to the Isle of Wight to visit some clients, always interesting to see different industries and hear the good things, and the struggles they face. Of all the struggles, currency concerns should never be high on the agenda. If they are, either Mark and I are not doing our job properly or we are not yet involved in helping on the FX side.

We also had a long-overdue catch-up with the key people at Moore (South) accountants who, like us are an owner-managed business, but unlike us are part of a huge network of accountants under the Moore Global brand. Their focus for the time being is very much to ensure firms are prepared for some harder times in case they arrive. Again, similar to our approach, we never claim to know what lurks around the corner but to completely ignore potential issues is never a sound business model and one that shareholders certainly won’t thank the board for.

What did I miss while I was out? Well, USD has pushed a little higher against GBP, with GBPUSD now 1.2270 although it had traded down as far as 1.2245 yesterday morning. EURUSD is back at the 1.0700 area having tested 1.0660 yesterday, GBPEUR has shifted below 1.1500 once again and is now 1.1475. USDJPY is back above 151.00, comments from BoJ Gov Ueda that they were still happy with their very easy monetary policy helped weaken yen. I wouldn’t be surprised of we get some verbal intervention from Japan but with Ueda sounding dovish for the time being it will be difficult for Japan to fight the weak-yen trend.

We don’t have a great deal of economic releases today but instead we have a bundle of central bank officials speaking, including Lagarde and Powell. For the moment the line that many seem to be taking is that although it is possible rates have peaked, there is still a chance of a move higher and cewrtainly no chance of rate cuts any time soon.

Elsewhere, the Israel/Gaza crisis continues with more concern that Israel’s response to the 7th October attacks is unreasonably harsh on the citizens of Gaza, but for Israel remain intent on wiping out Hamas. This is surely a somewhat flawed idea. You can eradicate many of Hamas’ ground troops and even perhaps remove Hamas from power in Gaza but to wipe out Hamas as an ideology is nigh on impossible, indeed the harder they try the more hatred it is likely to incite. Even if Hamas does disappear altogether, their thinking will remain in one form or another.

For now we remain hopeful that the situation doesn’t escalate into a wider war in the region. Already we have reports of attacks on US assets and US attacking various sites. Global politicians are meeting in Paris today to discuss ways of getting aid into Gaza. Eventually there must also be a plan for the rebuilding of Gaza after the utter destruction, whether that falls on the West or whether the likes of Saudi Arabia and Qatar get involved remains to be seen.

Have a great day

- 08.30 BoEs Pill speaks

- 09.00 ECB economic bulletin

- 13.30 US initial jobless claims

- 14.30 Feds Bostic, Barkin speak

- 16.00 Feds Barkin speaks

- 16.30 ECBs Nagel speaks

- 17.00 BoCs Rogers speaks

- 17.30 ECBs Lagarde speaks

- 19.00 Feds Powell speaks

- 22.30 NZ business PMI

- 01.30 RBA monetary policy statement

- 07.00 UK GDP, industrial production

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