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USDJPY falls on possible intervention after hitting new highs

Good morning


I hope you enjoyed the weekend and have returned fresh for another week.  Weather was a bit miserable, typically it looks like we’ll not have a couple of warmer and drier days. 


Action in Yen is dominating the headlines.  USDJPY traded above 160.00 overnight before suspected intervention took it down to almost 155.00.  It is now 157.00.  Yen crosses saw similar moves, GBPJPY hit 200.50 and EURJPY 171.50 before each plummeted to 194.50 and 166.40, now 196.70 and 168.25 respectively.  Japan have not confirmed taking action but given the scale of the move it is surely the only option.  It is actually a holiday in Japan today so liquidity was likely to have been thinner which could have exaggerated the move.


We did have a dip on Friday in USDJPY as well, not quite to the same extent but USDJPY fell rapidly from 156.70 to 155.00, although it did recover pretty quickly and indeed went on to make gains through the day.  Whether or not this move had any relation to intervention also remains to be seen.  Tomorrow we will see the Japan MoF FX operations data which should confirm what action they have taken.


On Friday we had the core PCE data from US.  It actually came in a touch higher than expected and USD did push higher through the afternoon but by the close it had give up a lot of those gains, and we’ve since seen a knock on of the huge USD selling against Yen overnight which has taken GBPUSD up to 1.2525 and EURUSD to 1.0715 from their Friday lows of 1.2450 and 1.0675.


In the UK we’re watching the political situation in Scotland closely.  Current First Minister Humza Yousaf has not resigned yet but may do so before facing a confidence vote.   Otherwise we have EU sentiment data and german inflation out today, neither of which are really likely to sway the markets.  Attention mostly on further intervention potential.


While today could be on the quiet side, this week is a big one, with US Fed rate announcement and US nonfarm jobs data the highlights.  We’ll also have other US JOLTS job numbers, ISM PMIs, plus EU inflation numbers through the week.  Plenty to keep us busy.


As feared, Spurs lost to Arsenal despite a decent attempt at a second half come back, just not enough to overturn a 3-0 deficit.  It was entertaining but highlighted Spurs’ fragility in defence.  Arsenal stay top of the league but Man City are one point behind them with a game in hand, and remain favourites.  Liverpool could only muster a draw at West Ham, they are not totally out of the title race but it would take both Arsenal and Man City to completely mess up.  Spurs face Chelsea on Thursday and Liverpool Sunday.


Mark wasn’t a happy chappy either as Leeds did nothing to help their fight for the automatic promotion places, losing to QPR 4-0,  Still, with Ipswich only managing a draw against Hull, Leeds remain in second place on goal difference although Ipswich do have a game in hand.  Leicester’s victory over Southampton sealed their return to the top flight, after a mid-season collapse looked like they had ruined their chances.


That’s all from me for now, have a great week.


-  10.00 EU consumer confidence

-  13.00 German HICP

-  00.30 Japan unemployment

-  00.50 Japan retail trade

-  02.30 AUS retail sales

-  02.30 China manufacturing, non-manufacturing PMI

-  02.45 China caixin manufacturing PMI

-  07.00 German retail sales


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