Currency Reports

Daily Currency Watch

Overnight comment in brief: 

12 September | Hawkish BoJ speak fails to lift JPY

• The lack of a downside surprise in the CPI data saw investors finally capitulate on expectations for a 50bp cut at next week’s FOMC meeting. Currently 28bp of cuts are priced in - the least easing expected since the start of August, when the weak ISM report was released. Despite the rise in UST yields, US equites ended sharply higher, led by the tech sector. The Asian session was much calmer, with UST yields little changed and Asian equites tracking US shares higher. The DXY index was also little changed around yesterday’s high. Oil prices also recovered some of the ground lost in recent sessions.
• The BoJ’s leading hawk Tamura spoke today suggesting that the BoJ may need to hike to at least 1.0%. Demand at today’s 20yr auction was reasonable. The PPI came in soft, while the MoF quarterly survey was firm. Despite the hawkish BoJ commentary, USD/JPY was little changed in Asian trade and sits around 142.60 as Europe comes in. German wholesale prices pushed lower. They had been paring YoY declines for much of the year to date, threatening to turn positive but the downdraft in commodity prices in the past few months is showing up, pushing back an eventual move into positive territory and possibly allowing the ECB more scope to ease, via keeping inflation expectations subdued. Ahead of today’s ECB meeting, trading was subdued and EUR/USD sits around 1.1020 as European trade gets underway. The UK’s RICS house price index surged, sharply topping expectations, jumping from -18 to +1, the first positive print since autumn 2022. The news had little impact on sterling and GBP/USD trades around 1.3050 as Europe opens.

Read the full report - 12 September 2024

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