It was only a matter of time before USDJPY hit the 110 level, given the broad underlying bid to the dollar, with this level achieved briefly during Asia trade. This puts it at levels last seen mid-08, but the benefits to the Japanese economy of the recent yen weakness are not that dramatic, with the underlying deterioration of the trade balance having only shown limited signs of reversal so far. Japan has moved a lot of its manufacturing production overseas, with increased energy imports also not helping. That said, the recent moves will no doubt be welcomed by the Japanese authorities, providing some support to the economy at the margins.
The main standout yesterday was the further weakness of the single currency, with core inflation developments underlining the pressures being placed on the ECB ahead of tomorrow’s policy meeting. We are likely to see some announcement of the much awaited asset-backed securities program tomorrow, with the FT today suggesting that the ECB is looking into the possibility of purchasing lower quality debt (Greek and Cypriot bank loans). This is likely to be resisted in certain quarters of the ECB. But with the pool of available assets to be purchased relatively limited (in comparison to other central banks early on in the financial crisis), this reflects the degree to which the ECB having to push boundaries in order to make the policy options available to them more effective. As such, the attractiveness of a weaker currency is pretty clear at this point in time.
Final PMI data for the Eurozone and preliminary data for the UK and the US (ISM manufacturing) are the main points of note for the data calendar today, with US ADP report also of interest ahead of US jobs data Friday.
FxPro UK Limited is authorised and regulated by the Financial Services Authority, registration number 509956. CFDs are leveraged products that incur a high level of risk and it is possible to lose all your capital invested. Please ensure that you understand the risks involved and seek independent advice if necessary.
Disclaimer: This material is considered a marketing communication and does not contain, and should not be construed as containing, investment advice or an investment recommendation or, an offer of or solicitation for any transactions in financial instruments. Past performance is not a guarantee of or prediction of future performance. FxPro does not take into account your personal investment objectives or financial situation. FxPro makes no representation and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied by any employee of FxPro, a third party or otherwise. This material has not been prepared in accordance with legal requirements promoting the independence of investment research and it is not subject to any prohibition on dealing ahead of the dissemination of investment research. All expressions of opinion are subject to change without notice. Any opinions made may be personal to the author and may not reflect the opinions of FxPro. This communication must not be reproduced or further distributed without the prior permission of FxPro. Risk Warning: CFDs, which are leveraged products, incur a high level of risk and can result in the loss of all your invested capital. Therefore, CFDs may not be suitable for all investors. You should not risk more than you are prepared to lose. Before deciding to trade, please ensure you understand the risks involved and take into account your level of experience. Seek independent advice if necessary. FxPro Financial Services Ltd is authorised and regulated by the CySEC (licence no. 078/07) and FxPro UK Limited is authorised and regulated by the Financial Services Authority, Number 509956.
Recommended Content
Editors’ Picks
EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.