Data/Event Risks
- EUR: Only German industrial production figures out mid-morning, otherwise little of consequence. ECB meeting tomorrow – Draghi will renew his vows of commitment to the single currency.
- GBP: Trade out at 09.30, likely to remind us that net exports has been a major disappointment in terms of its contribution to the rebalancing of the economy. MPC tomorrow, no change expected.
- AUD: Building approvals are released just after midnight, followed by Chinese exports and imports. Neither is likely to move the dial on the Aussie, which remains comfortably ensconced in a 1.02-1.06 trading band.
Idea of the Day
These days the yen is where the action is, with plenty of flow in both directions. Overnight the yen bulls had their way for a time, with USD/JPY falling below 87.0, before it whip-sawed back up to 87.50 after strong buying from Japanese importers. EUR/JPY has also seen a lot of flow – this cross almost dropped back to 113.50 overnight but has since jumped back to 114.50. Those traders attempting to profit from a yen-retracement are being mercilessly whiplashed.
Latest FX News
- JPY: After the sustained sell-off of the past couple of months, the first half of this week has been a welcome respite. Noticeable has been the increased trading activity by our Japanese clients, as those with yen-based wealth seek to diversify into other ‘stronger’ currencies.
- EUR: Subdued for much of the day against the dollar. Some central bank selling pushed the euro back below 1.31.
- GBP: Cable reached 1.6130 yesterday in Asia, but progressively lost traction over the course of the day, weighed down by some determined selling by central banks. Looks susceptible to a retest of 1.60 in the short term.
- AUD: Back above 1.05 after earlier sell-off on soft retail sales figures. AUD/JPY buying overnight provided a boost. Aussie still looks remarkably solid.
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