US Markets Calm – Not So Much the Japanese Yen
US markets were reasonably calm yesterday on the first day of what promises to be a busy week for investors, however the same cannot be said for the Yen market where suspected intervention gave the currency its most volatile day for years. The major US indices experienced a day of solid, unremarkable gains, the Dow closing up 0.39%, the S&P 0.32%, and the Nasdaq adding 0.35%. The main moves of the day came in FX where UsdJpy was smashed back down after tipping above the 160.00 level early in the piece. US Treasury yields drifted lower ahead of the Fed meeting with the 2-year losing 1.2 basis points to 4.980% and the 10-year dropping 4.1 basis points to 4.628%. Oil prices took a dip as ceasefire hopes grew in the Middle East, Brent off 1.2% to $87.20 a barrel and WTI losing 1.5%, to trade down to $82.63 per barrel. Gold edged higher again, gaining 0.2% on the day to close in New York at $2,342 per ounce.
Japanese Authorities Make Good on Intervention Threats – Probably!
The Japanese Yen experienced its most volatile trading day in years yesterday after it rebounded strongly following a break of the key 160.00 level in UsdJpy early in the Asian trading session. Senior officials have still to confirm where it was intervention but in the words of an experienced FX trader who has witnessed multiple cases of BOJ action in the past “If it walks like a duck, talks like a duck, tastes good with orange sauce and takes UsdJpy 5-big figures, then it’s intervention”. Japanese markets were closed for a holiday and the lower liquidity levels probably led to exacerbated moves, something which the Ministry of Finance would have been well aware of, but traders will remain on high alert today throughout the trading sessions as instances of intervention are rarely one-off events.
Trading Event Calendar Kicks in from Today
It was supposed to be a quiet day yesterday for the markets, but suspected Yen intervention put paid to that notion and the macroeconomic calendar starts to heat up from today into the rest of the trading week. First up in the Asian session are the Retail Sales numbers out in Australia, with expectation for a 0.2% increase for the month-on-month number, however these are likely to be superseded by the key Chinese PMI data prints later in the day, where investors will be hoping for a print above the anticipated 50.3 number for the headline Manufacturing PMI. The London session sees a plethora of lower-tier GDP numbers from across the continent, but the New York session has more influential data releases scheduled. The initial focus will be north of the border for the Canadian GDP data release before the first of many, major US data releases hit the market with the Employment Cost Index data due followed by the CB Consumer Confidence number.
