USDJPY higher but no sign of intervention

Good morning

My eldest has returned from the US having been there for the first three England world cup matches, combined with a road trip covering some 2,500 miles.  All in all, he had a good time but spent more than anticipated, quite surprised at the price of things out there.  Still, the four of them that went will have made some memories, that’s for sure.  So, now everyone is back from holidays, in the space of one week the Evans household has gone from being just me and my wife to now being four of us plus three guests from New Zealand.  I do like a busy house although with all the comings and goings this morning I’m a little behind schedule.

We had a spell of USD weakness yesterday afternoon that took GBPUSD to 1.3275 and EURUSD to 1.1435, however that didn’t last too long and as I type this morning EURUS is just on 1.1400 and GBPUSD back to 1.3240.  These 30 or so pip moves are something I’d never have written about but we’ve had such tight ranges sometimes that such moves now seem a reasonably big even, when in reality its not really significant. 

GBP has held up well despite comments from BoEs Bailey who said that pre-Iran war pricing of two BoE rate cuts this year was not unreasonable and while he’s not happy inflation saw an uptick on higher energy prices, he noted that oil prices are now back to almost pre-war levels and he sees inflation slowly returning to the 2% target.  GBPEUR is 1.1615, ECB officials are saying there will be no need to raise rates again if energy prices can stay stable.  Against AUD and NZD, GBP is currently 1.9210 and 2.3325.

Yen has continued to weaken, USDJPY hit 162.85, not 20 pips off those highs but we’ve heard very little from Japanese officials, perhaps they understand that the market expects their usual ‘we are watching’ comments and as such verbal intervention means less and less.   Markets remain nervous though, I still wonder whether we’ll see some action later in the week in the reduced liquidity of the US holiday, but there is some suggestion that we won’t see anything until 165 now. 

Central bank speakers feature highly on the calendar today, particularly this afternoon when we’ll have Warsh, Lagarde, Bailey and Macklem all on a panel at the ECB forum in Sintra, Portugal. This is Warsh’s first outing since his debut as Fed chair a couple of weeks ago, it will be interesting to see if he’s pushed for some sort of forward guidance given he is looking to limit any such talk, seeing it as unhelpful.  US ADP jobs data and ISM manufacturing PMIs are also on todays calendar but the highlight of the week will be tomorrows nonfarm payroll, released a day early due to the US holiday on Friday.

England play their first world cup knockout match later today against DR Congo.  When my youngest was much younger he once saw that on map and called it ‘Doctor Congo’, something that has stuck in the Evans household ever since.  It’s a pleasant 5pm kick off so do try to avoid complicated pricing requests late in the afternoon, but if you do need something Mark will certainly be the man to talk to!

Have a great day…

-  09.45 ECBs Cipollone speaks

-  10.00 EU HICP

-  11.15 ECBs L:ane speaks

-  13.15 US ADP employment

-  14.00 Feds Warsh speaks

-  14.00 ECBs Lagarde speaks

-  14.00 BoCs Macklem speaks

-  14.00 BoCs Bailey speaks

-  15.00 ECBs Lagarde speaks

-  15.00 US ISM manufacturing PMI

-  23.45 NZ building permits

-  02.30 AUS trade