• richard evans

Yen makes multi-year lows

Good morning


US dollar started the week on a stronger footing, trading higher against most majors with GBPUSD dipping just below to 1.3000 and EURUSD to 1.0760, both currently a few pips off their lows as I type. I had mentioned last week about whether we would see any talk emerge of a 75bps rate rise by the Fed, I see that Feds Bullard over the weekend has said such a move cannot be ruled out as the Fed aim to get rates to 3%+ this year.


Yen continues to lose ground, USDJPY now up at 128.25, levels not seen for about twenty years, while EURJPY is up to 138.35, pretty much seven year highs. BoJs Kuroda said the yen depreciation could hurt companies plans, Japan FinMin Suzuki has said sharp yen moves are undesirable, adding they would communicate closely with other nations abuot how to respond to currency movements appropriately. Japan historically has said a weak yen helps their economy. The most recent moves suggest the market isn’t really considering any possibility of intervention. Yen carry trades starting to gain more interest


I had mentioned last week about whether we would see any talk emerge of a 75bps rate rise by the Fed, I see that Feds Bullard over the weekend has said such a move cannot be ruled out as the Fed aim to get rates to 3%+ this year.


China cut their RRR last week by 25bps, a move smaller than many had thought leaving the door open to further cuts. It is likely PBoC will also cut their LPR tonight from 3.7%. Shanghai lockdowns continue and it is no surprise the press are questioning the Chinese claims that despite the rise in infections and vast lockdowns, there have been just three deaths from Covid in Shanghai since 2020. It is all about how deaths are classified. Apparently 27 people in a care home died ‘with’ Covid or having recently had Covid but Covid was not listed as a cause of death.

We have heard the sad but inevitable news from Ukraine that the Russian offensive on the Eastern regions of Ukraine has begun with a barrage of rocket and artillery fire. I fear this area will be easier for Russia to get control of, it may take time given the Ukrainians are probably better equipped than they were back in 2014, but the logistics will be easier and eventually I see Russia controlling the East and South of Ukraine to give them their road route to Crimea from Russia.


So while war rages on in Eastern Europe, at home we were lucky enough to enjoy a long weekend with fine weather. I’m sure there are a few red faces, necks and arms this morning as people venture off to work after the break. Many kids are back to school this morning, mine included, although I know some still have a week off. There was some Premier league football to enjoy, although defeat for Watford puts them further at risk of demotion, while Spurs defeat at the hands of a stunningly good Brighton was only made easier to bear by the inability of their closest rivals to make telling ground against them. Its lining up to be a good end to the season.


- 13.15 CAD housing starts

- 13.30 US housing starts, building permits

- 17.05 Feds Evans speaks

- 17.30 SNBs Jordan speaks

- 00.50 Japan trade balance

- 02.15 PBoC rate announcement

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