Tag Archive: Japan
Japan Drives Home Message
Overview: The US dollar is mixed, but the
spotlight is on the Japanese yen. It appears that with the market challenging
Monday's intervention, Japanese officials entered the market shortly after the
US equity market closed yesterday, as the Asia Pacific session got underway and
sold dollars again. Initial estimates suggest the intervention amount was
two-thirds of Monday's. The timing caught the markets wrongfooted. Tokyo
markets are closed Friday...
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May Day Fed Day
Overview: Much of Asia and Europe are off for the
May Day labor holiday. The dollar is mostly softer in the thin activity. However,
the dollar has edged higher against the yen and approached JPY158. The euro
initially fell to $1.0650, a six-day low and where a billion euros in options
expire later today. It has recovered to almost $1.0675. Emerging market
currencies are subdued. Central European currencies, the South African rand,
and Mexican peso...
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Yen Retreats, while Stronger EMU GDP Underscores Nascent Recovery and Lifts the Euro
Overview: Stronger than expected eurozone GDP
strengthened the sense that a nascent recovery may be taking hold and has given
the euro a bid in the European morning. The dollar, though, is enjoying a
firmer tone against the other G10 currencies today. Australia's unexpected
weakness in retail sales has weighed on the Antipodean currencies. The Aussie
and Kiwi are off slightly more than 0.5% today. Japanese data were mixed (a
recovery in industrial...
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Yen Dumps before It Jumps
Overview: The FOMC meeting, the US employment report, and
eurozone CPI were to be the highlights of the week, but the Japanese yen stole
the march to start the week. The dollar soared to almost JPY160.20 before
falling sharply to JPY154.55 and then rebounding to almost JPY156.00. Intervention
has not been confirmed and BOJ data will not cover it until next month. On
balance, it appears that most think it was algo-trading in thin markets given
the...
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Will the Market Push the Dollar Above JPY152 as Japanese Prime Minister Heads to the US?
Overview: The jump in US rates after the employment
report failed to ignite a sustained rally in the dollar and this shaken the
market's near-term confidence. The dollar has been mostly confined to narrow
ranges and the low yielding Swiss franc and Japanese yen are softest with the
G10 complex today. The dollar is knocking on JPY152. The Scandis and Antipodeans lead the advancers. The euro has
made little headway despite a much stronger than...
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US Employment Data to Set Dollar’s Course
Overview: The
focus is squarely on the US employment report. At the risk of oversimplifying,
given the position adjustment in the past 48 hours, a solid report can see the
greenback recover, while a disappointing report will likely see it deepen the
correction of the rally that began with the February jobs report. The dollar
recovered in the North American afternoon yesterday and many observers
attributed it to the bevy of Fed comments. Yet, the...
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Greenback Losses Extended, but Look for Consolidation in North America
Overview: The softer-than-expected ISM services report caught the market leaning the wrong way. Although interest rates had a muted reaction, the dollar was sold. In fact, the Dollar Index saw its second-biggest loss of the year, falling by about 0.50%. ISM services prices paid increases moderated to their slowest since March 2020. Supplier deliveries improved to their best since 2009, suggesting a supply chain improvement. Still, the Fed funds...
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Rate Adjustment Underpins Greenback
Overview: The adjustment to US interest rates
continues and this helps underpin the US dollar. The 10-year yield rose to
4.40% yesterday, the highest it has been since last November. It is trading
4.34%-4.38% today. The two-year yield is firm though holding below the Q1 high
set last month near 4.75%. This week, for the first time since last October,
the Fed funds futures do not have at least a quarter point cut discounted for
July. As recently as...
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Gold, Oil, and Interest Rates Rise
Overview: The market put more weight on the rise in
the US ISM manufacturing survey than the downward revision to the manufacturing
PMI and the unexpected back-to-back decline in construction spending. US rates
shot up and lifted the greenback. The Dollar Index made a new high for the
year, a little above 105, which had been anticipated by the new lows recorded
by the Bannockburn
World Currency Index (a GDP-weighted basket of the currencies of...
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China PMI is Better than Expected but the Greenback Still Rises above CNY7.23
Overview: The dollar is trading quietly against the G10
currencies as European markets remain on holiday. Narrow ranges have prevailed.
The dollar-bloc currencies are leading with minor gains, perhaps helped on the
margins by better-than-expected Chinese PMI, but the Scandis, which also
typically do well amid a better global growth profile are the laggards. This
may speak to the light liquidity conditions. Japan may have missed a tactical...
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Heightened Threat of Japanese Intervention Pushes Greenback Away from JPY152
Overview: The dollar neared JPY152, setting a new
34-year high. This appeared to spur a senior official meeting in Tokyo,
ostensibly to talk about the response. Previously, we suggested that Friday,
when most markets outside of Asia will be closed, could provide an interesting
opportunity for intervention. The implicit threat was enough to take the dollar
to JPY151.10 in the European morning. Most of the G10 currencies are softer
against the dollar...
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Dollar’s Recent Gains Pared but Firm Undertone Remains Intact
Overview: After surging at the last week, the dollar
consolidated yesterday and is continuing to do so today as slightly lower
levels. The Swiss franc is the only G10 currency unable to gain traction
against the greenback today. Still, the dollar's pullback has barely met the
minimum retracement targets of the jump last Thursday and Friday. The PBOC
lower the dollar's fix slightly, but the proverbial toothpaste is out of the
tube and officials are...
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CNY7.20 Gives Way as Strong Greenback Proves Too Much
Overview: The dollar's post-FOMC sell-off has
been completely reversed and the greenback has reached new highs for the week
against most of the G10 currencies. Heightened intervention fears and softer US
yields has helped steady the yen, which near unchanged now, and is the best
performer. The Scandis and Antipodeans are the heaviest, off 0.65%-0.90%. For
the first time since last November, the US dollar has risen above CNY7.20 and
continued to...
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Market Hears a Dovish Fed and Sells the Greenback
Overview: The Federal Reserve triggered a dollar
sell-off yesterday and follow-through selling was seen in Asia before
profit-taking emerged. That created a new dollar selling opportunity in early European
turnover. The FOMC revised up this year's growth forecast, shaved the
unemployment projection, and while maintaining the PCE deflator forecast, and
the median dot remained for three cuts this year. The soft-landing scenario was
underscored and...
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Euro’s Recovery to $1.09 Looks Vulnerable while Yen Falls to New Lows for the Week After Strong Pay Raises Confirmed
At the end of last week, the derivatives market was again pricing in nearly four Fed cuts this year, but this week's data have seen expectations re-converge with the Fed's three rate cuts signaled in December, while cutting the odds of June hike to the lowest in the more than four months.
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Consolidation Featured Ahead of Tomorrow’s US Retail Sales and Friday’s Japanese Wage News
Overview: We came into this week expecting the dollar to rise on the back of a recovery in rates. The two-year note has risen from 4.40% after the jobs report to 4.60%. The dollar's rise has
been less impressive.
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Ueda’s Comments Weigh on Yen as the Market Awaits US CPI
Overview: The US CPI has become one of the most important high-frequency economic reports for the capital markets. The dollar is going into the report narrowly mixed against the G10 currencies. Comments by BOJ Governor Ueda about the weakness in consumption of non-durable goods was seen by some as reducing the likelihood of a change in policy next week.
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Japan’s Q4 23 Contraction Revised Away, Helping Keep Yen Bid
Overview: News that the Japanese economy expanded rather than contracted in Q4 23 has fanned expectations that rates could be as early as next week. This is helping keep the yen supported, though it remains in the pre-weekend range, albeit barely.
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Forex Becalmed with the Greenback Mostly Firmer in Narrow Ranges
(Business trip will interrupt the commentary over the next few days. Check out the March monthly here. Back with the Week Ahead on March 9. May have some comments on X @marcmakingsense.) Overview: Outside of the Australian and New Zealand
dollars, which are off by 0.20%-0.25%, the other G10 currencies are little
changed and mostly softer in narrow ranges. A firm Tokyo CPI, mostly on base
effects and softer rates helped keep the US dollar below...
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Narrowly Mixed Dollar to Start the Big Week for Europe and North America
Overview: The dollar is narrowly mixed against the G10 currencies to begin the week that features a Bank of Canada and ECB meetings, US jobs data, Federal Reserve Chair Powell's two-day testimony before Congress, and US President Biden's State of the Union address.
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