USDJPY at one-year lows as risk aversion continues

Feb 09, 1:26 pm
USDJPY

Today’s Economic events

  • Japan M2 money stock y/y 3.20% vs. 3.10%
  • Australia NAB business confidence 2 vs. 2 previously
  • Japan prelim machine tool orders y/y -17.2% vs. -25.7%
  • Germany industrial production m/m -1.20% vs. 0.20%
  • Germany trade balance 19.4bn vs. 19.4bn
  • MPC Member Cunliffe speech
  • UK trade balance -9.9bn vs. -10.4bn

Coming up

  • JOLTS Job openings
  • Wholesale inventories m/m

The markets in Asia saw the equities falling sharply with the benchmark Nikkei225 closing -5.40% lower as Japan’s 10 year bond yields fell below 0% for the first time after the BoJ surprised with negative rates in late January. With the weak Nikkei225, the Yen continued to surge ahead higher. USDJPY is posting losses for another day, down -0.83% for the day. Prices, however, remain above the intraday lows posted just under 114.5.

The commodity risk currencies also fell sharply today. AUDUSD is down -1.40% for the day, trading at 0.698, marking a 10-day low in prices, while NZDUSD is down by a modest -0.79% for the day, trading at 0.657. Despite the lack of any economic data, the markets continued to trade in a risk aversion mode with the Yen surging while the commodity risk currencies posted strong losses.

The European trading session started off with German industrial production falling -1.20%, more than expected -0.20%. The Euro was, however, unfazed as EURUSD is up 0.36% for the day trading near 1.125, the same levels seen last Friday ahead of the NFP release.

The British Pound was, however, weaker in comparison, down -0.14% for the day, as the Cable struggles to hold on above yesterday’s lows near 1.4365. GBPUSD briefly posted an intraday high near 1.448 before pulling back lower. Support is seen at 1.43 which could be the next level of interest in GBPUSD. The European equity markets were also under pressure with the German DAX down -1.68% while the London FTSE100 is down -1.11% at the time of writing.

[Tweet “Gold is up 0.58%, as the precious metal pulled back off $1200 to post a session low near $1186.5”]

The NY trading session is quiet today with no major market moving events scheduled. USDCAD is trading flat with -0.07% declines for the day, as prices look to form a ceiling near 1.40 handle. USDCAD briefly tested session lows above 1.385 before recovering.  The US equity markets are also pointing to a weaker open today with the Dow Jones Industrial Average down -0.76% while the S&P500 futures are down -0.81% ahead of the market open.

On the commodity front, Gold prices remain a bit quiet after yesterday’s rally to $1200. At the time of writing, Gold is up 0.58%, as the precious metal pulled back off $1200 to post a session low near $1186.5. However, further upside could be seen on a break above the $1200 barrier.

WTI Crude Oil prices are managing to recover today, down -0.83% currently, with prices trading at $29.86 a barrel, marking a fourth straight day of declines.

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John has over 8 years of experience specializing in the currency markets, tracking the macroeconomic and geopolitical developments shaping the financial markets. John applies a mix of fundamental and technical analysis and has a special interest in inter-market analysis and global politics.

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