Coming back to find Yen much higher

Good morning

Well we’re back from a wonderful trip to Marrakech.  What a place!  Certainly vibrant and lively, and certainly hot.  We did so much, it feels as though we’ve been away for over a week when in fact it was just three nights.  Not sure I’ll ever get used to temperatures in the mid 40’s mind you, that really is something else.  I don’t think I’ll ever complain about the weather here again.

Anyway what have I missed here?  I can’t say I kept up with all the news while I was away, but I did see that back on Thursday afternoon we saw the start of intervention in USDJPY that ultimately took the pair from the mid 163’s all the way down to 155.25 yesterday morning, which was pretty much the low after BoJ intervention back in late-April/early May.  Coincidence or not, but that 155 area now looks incredibly important. 

GBPJPY dropped some nine big figures from 218.60 to 209.60.  This was coordinated intervention, with Japan setting off by buying some $30bn worth of yen, the US helping along as they sold EURJPY which sent that pair from a high around 187 to a low around 179.40.  Yen is currently off its highs at 157.80, 212.00 and 181.65 against USD, GBP and EUR, with the market still very nervous of further official action.

What I did find of interest was despite the large USD selling against yen, the US dollar did not weaken so much against other currencies.  Back in late April GBPUSD moved from around 1.32 to 1.35 while this bout of intervention saw GBPUSD move from 1.33 to 1.35.  Perhaps it was the fact the US were reportedly selling EURJPY rather than USDJPY that limited overall impact on the US dollar.  As I type, GBPUSD is 1.3435, EURUSD 1.1505 and GBPEUR 1.1675.  GBP is 1.9135 against AUD and 2.2885 against NZD, with AUDNZD down in the mid-1.19;s , 100 points or so lower than this time last week.

In other news, US equities are close to record highs, oil  is back down to $80 (WTI) and $84.50 (Brent), the latter helped by Trump comments that he’ll stop attacks on Iran as long as a deal is made quickly.  I’m not sure how many times I have heard that but we have certainly seen Trump threaten Iran with nigh-on oblivion if they don’t make a deal and so far it doesn’t seem to have helped secure any form of peace. 

While we’re on Trump, I read while I was away that Trump is looking at charging for early insight into tweets he will make.  This is surely insider trading at its peak and its most transparent, and cannot possibly be legal. 

It’s a big week in terms of economic data, we’ve already had some stronger US ISM manufacturing PMI, the equivalent services PMI is out tomorrow and its US employment data week which kicks off today with JOLTS, tomorrow brings ADP, Thursday challenger job cuts and the main event on Friday with US nonfarm payrolls.  We’ll also have NZ employment, Aussie trade, EU retail sales and Canada employment so every chance we could see volatility through the week.

Have a great day…

-  14.30 CAD S&P manufacturing PMI

-  15.00 US JOLTS, factory orders

-  23.45 NZ employment

-  0.00 AUS S&P services PMI

-  00.50 BoJ minutes