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  • richard evans

Yen weaker this morning as Ueda signals no policy change next week

Good morning


GBP has made back a little ground after some stronger than expected retail sales numbers this morning. GBPUDS pushed from around 1.2870 to 1.2900, it has settled back a few points lower as I type but this may stop the rot that we have seen over the past couple of days. GBPEUR is at 1.1575 having been below 1.1500 earlier this week.


The Tories didn’t do well in by-elections, losing two key seats although did manage to hold on to Uxbridge, Boris Johnsons old seat. Sunak has indicated Nov 2024 for a general election. They have a lot of work to do between now and then if they want to remain in power but this may give enough time for the economy to recover and perhaps interest rates to drop a little.


South Africa kept rates on hold at 8.25% yesterday, while Turkey lifted rates by 2.5% to 17.5%. For now USDTRY remains capped just below 27.00 as it has been for most of this week.


BoJs Ueda has said there will be no policy tweaks at next weeks BoJ rate meeting. There is some thinking BoJ may tighten in the coming months, but with Japan inflation numbers coming out as expected overnight, BoJ will be quite happy to sit back and wait. USDJPY is higher at 140.90, GBPJPY now 181.55, Yen having a spell of weakness as I type which has pushed both pairs up by 50-80 pips or so and it looks like there is more in this move. I’m not sure what has driven it as yet.


PBoC fixed USDCNY at 7.1456, 10 pips lower than yesterday and still 500 pips below the sort of level it would be reasonable to expect. The China FX regulator has said Yuan should remain more stable as Fed rate rises come to an end, but they will act to prevent large volatility in the exchange rate


CAD retail sales out this afternoon, no US data today but the market is already looking ahead to next weeks calendar which sees rate announcements from Fe and ECB, as well as BoJ mentioned above. For now, both Fed and ECB seem to favour a 25bps increase.


So we look forward to the weekend, although the weather doesn’t look terrific. We do have The Open to entertain us, plus of course the fourth test of the Ashes series which moves into its third day, England looking to build on their overnight lead after an impressive batting performance yesterday. Eyes will be on the clouds though, with plenty of rain and thunderstorms forecast the chances of this match not reaching its conclusion is very high, which would mean Australia retain the Ashes.


Meanwhile Spain are currently playing Costa Rica in the womens world cup. Good luck to England who take on Haiti tomorrow.


Have a great weekend, hope you stay dry wherever you may be.


- 13.30 CAD retail sales


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