Yen up, Oil down. Risk is off the table

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Yen_BoJ

Today’s Economic events

  • Australia AIG Construction Index 45.2 vs. 46.1
  • BoJ Gov. Kuroda Speech
  • French Trade Balance -5.2bn vs. -3.8bn
  • Swiss foreign currency reserves 576bn vs. 571bn previously
  • UK Halifax HPI m/m 2.60% vs. 0.80%
  • ECB monetary policy meeting minutes released
  • Canada building permits m/m 15.5% vs. 4.70%
  • US weekly unemployment claims 267k vs. 271k

Coming Up

  • The US Consumer Credit
  • Fed Chair Janet Yellen speech

The markets could be setting up for an epic showdown between currency speculators and the Bank of Japan as USDJPY continues to gain strong bearish moment. Trading at 108.375, USDJPY is trading at an 18-month low losing over 1.20% at the time of writing. Despite on and off comments from Japan, no clear commitment or assertiveness further added to the declines with hopes waning that the BoJ will intervene to stem the declines. Even if the Bank of Japan does manage to stabilize the Yen’s strong appreciation, the bounce is likely to be short-lived, as seen by the reaction to the negative rates that were introduced in January. Equity markets in Asian were mixed but overall subdued. The Nikkei225 closed with modest gains of 0.22% while the Shanghai Composite was down -1.35%. The markets failed to rally following the release of the Federal Reserve’s meeting minutes from March 16th which saw members arguing the case for an April rate hike but later determined that the global risks were increasing warranting a more gradual approach.

The AUSDUSD is down 0.88% at the time of writing with the commodity-linked currencies posting losses as well, despite the Greenback was weaker. Economic data from Australia today included the AiG Construction index which fell to 45.2 from 46.1 previously. NZDUSD is also down 0.50% in today’s trading after a brief rally to post a 3-day high at 0.685 before giving back the gains.

In Europe, comments from ECB officials included Mario Draghi, Peter Praet, and Benoit Coeure, who defended the central bank’s policies.

Although downbeat on the economy, the ECB members said that they were committed to the central bank’s mandate and that more could be done if need be, in an effort to undo the ECB’s press conference rally which sent the euro surging higher.

Although downbeat on the economy, the ECB members said that they were committed to the central bank’s mandate and that more could be done if need be, in an effort to undo the ECB’s press conference rally which sent the euro surging higher. EURUSD is down 0.31% at the time of writing. ECB’s monetary policy meeting minutes were announced today which showed that that there was a strong consensus among the ECB officials to ease monetary conditions in order to boost inflation in the Eurozone.

GBPUSD is taking a breather today following the strong losses earlier in the week. GBPUSD is down 0.32% and looks more stable compare to its peers. Prices touched a low of 1.40 yesterday before closing higher, and price action so far has been limited within yesterday’s range. European markets are down with the German DAX losing 0.32% and the London FTSE100 down 0.20%.

The NY session opened with Canada’s building permits rising 15.50%, more than the expected 4.70% increase for the month of February. January’s building permits data was also revised higher from -9.80% to -9.50%. USDCAD gained 0.12% at the time of writing, but following the release, the currency is paring back some of the gains. In the US, weekly jobless claims rose less than expected to 267k but the dollar was muted to the data. Keeping with the global trend today, US equity market futures are deep in the red. The Dow Jones futures are down 0.37% while the S&P500 futures are down 0.41%.

On the commodity front, Oil prices turned weaker following yesterday’s gains led by a surprise drawdown in inventory. WTI Crude Oil futures are down 0.53% at the time of writing, trading at $$37.5 a barrel. Gold prices gained amid all the risk off sentiment with the precious metal rallying 1.20% keeping up the bullish momentum since yesterday’s release of the FOMC minutes. Gold is trading at $1237 an ounce currently.

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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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