Yen takes the lead as markets remain calm

Mar 07, 1:23 pm
Yen_JPY Trends

Today’s Economic events

  • Australia AIG construction Index 46.1 vs. 46.3 previously
  • ANZ Job advertisements -1.20% vs. 0.90% previously
  • BoJ Governor Kuroda speech
  • Japan leading indicators 101.40% vs. 101.60%
  • Germany factory orders m/m -0.10% vs. -0.40%
  • Swiss Forex currency reserves 571bn vs. 575bn previously
  • BoE Member Haldane speech
  • Eurozone Sentix Investor confidence 5.5 vs. 8.8

Coming up

  • US Labor markets conditions index m/m
  • FOMC Member Brainard speech
  • FOMC Member Fischer speech
  • US Consumer credit m/m
  • New Zealand Manufacturing sales q/q

The markets continued the theme from Friday as the Yen remained firm in today’s session. The Yen was seen to be gradually strengthening following late Friday’s rally which fizzled out after the US nonfarm payrolls were released. The Yen was also supported by comments from BoJ’s Kuroda early today who stuck to his previous rhetoric that monetary policy would be adjusted without hesitation if need be but that the Central Bank was not looking at taking additional policy steps at this point in time. He was optimistic that the negative rates would play a big role in lowering interest rates and that combined with QQE inflation would accelerate to the 2.0% target range.

[Tweet “The most recent inflation data showed the BoJ’s core inflation rising 1.10% on a year over year basis”]

The most recent inflation data from Japan, released on February 26th showed the BoJ’s core inflation rising 1.10% on a year over year basis, easing from 1.20% growth rate a month ago. The Asian equity markets were mixed with the Nikkei225 down -0.61% while the Shanghai Composite gained 0.85%.

Over the weekend, at China’s National People’s Congress event Chinese Premier Xi Jinping unveiled a series of plans which includes over five to six million state workers being laid off over the next two to three years, mostly from the coal mining industry while also planning to cut taxes and introduce deregulations and reductions in state spending. The economic reforms are expected to boost manufacturing which has slowed down significantly over the past months followed by a series of monetary policy easing from the PBoC.

USDJPY is trading weaker today, down 0.25% after the Greenback posted a steady decline from 114.17 highs on Friday.

The Australian dollar is down 0.19% today after Friday’s rally saw prices trade above 0.7422 briefly. AUDUSD gapped down today opening at 0.7407. Losses in NZDUSD were more pronounced as the Kiwi is down 0.79% for the day ahead of the RBNZ’s monetary policy decision due on March 9th.

In Europe, equity markets are seeing a down day today with the German DAX down 0.90% while the London FTSE100 is down 0.96%. The Euro is weaker with prices gapping lower to open at 1.099 following a brief rally to 1.1027 on Friday. EURUSD, however, remains supported above 1.095 level. Eurozone Sentix investor confidence was down to 5.5 below estimates of 8.8 and down from 6.0 previously.

The British Pound is down 0.49% for the day as the Cable continued to decline since the open. GBPUSD is trading at $1.416 at the time of writing.

The NY trading session is expected to remain quiet with no major releases scheduled. The Labor Market Conditions Index is due followed by consumer credit data. FOMC Members Stanley Fischer and Brainard are scheduled to speak later today. Brainard is considered to be a dove while Fisher’s comments are likely to stay neutral. US futures are pointing to a weaker start with the Dow Jones futures down 0.22% and the S&P500 down 0.34% ahead of the opening bell.

On the commodities front, Gold prices are looking at another leg higher following Friday’s declines to $1260. At the time of writing, Gold is up 0.99% for the day, trading at $1271 an ounce. WTI Crude Oil futures for April delivery continue to keep up the upside momentum. Prices were flat for the most part today as WTI Crude Oil is trading currently at $36.4 a barrel, with 0.55% gains for the day.

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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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