Currency traders saw a whippy start to today’s Asia session. Following a routing of US equities in the final hour of New York trading which caused a sharp sell off in the high yielding JPY crosses, traders geared up for some dicey action. With the NY close still fresh in their minds, the first action of session was a cross move lower. However, this wouldn’t last, as speculators entered the market looking to buy on any pullback.
Beginning the session with a quick move to the downside, EURJPY bottomed out in the 162.60s. Most sellers were those looking to offer the high yielding cross on the heels of the US equity sell off expecting Asian equities to follow, and thus adding additional pressure to the carry pairs. As Asian equity indexes opened higher, it became apparent that this scenario wasn’t in the cards. EURJPY shot higher 90+ pips from its lows as the carry trade was on again. AUDJPY followed with a gain of 75+ pips, helping it to deal back over the 100.00 level and into the 100.20s. After a significant spike lower to start the session, NZDJPY bounced back 70+ points as well and into the 85.20s
Ahead in tonight’s upcoming London session, we may be in store for a reversal of the carry. Most of the high yielders dealt unconvincingly higher throughout Asia, despite news that would seem positive for the JPY crosses. Reports and market chatter indicated that the so called “smart money” was selling into the short term strength. With CPI due out of the US tomorrow morning, we could see a thinner market than usual causing many currency traders to be on the look out for exaggerated moves.
Upcoming Data Releases (London Session):
- UK: 0430 Retail Sales (MoM); Consensus 0.1%
- Retail Sales (YoY); Consensus 4.8%
