FX News Today
Asian Market Wrap: 10-year Treasury yields are down -0.2 bp at 3.061%, 10-year JGB yields are up 0.1 bp at 0.110%. Yields have come quite a way over the past week and Treasury yields are still holding above the 3% mark, but the stock market rally started to stutter during the Asian session with indices turning mixed. The Dow Jones still managed a solid gain yesterday, but the NASDAQ closed slightly lower and in Asia stocks drifted. Japanese indices traded near three months highs, but at these levels it seems investors are getting cautious as trade concerns continue to cloud over the outlook. Nikkei and Topix are down -0.045 and -0.12% respectively. It would not be the first time that Chinese indices rebound late in session, but it seems for now markets are consolidating and waiting for further news. US futures are also narrowly mixed, oil prices are higher and the WTI future is trading at USD 71.63 per barrel.
FX Action: USDJPY has drifter lower, posting a two-day low at 112.07 in a moderate move driver by a softer Dollar. Risk appetite has continued to hold up, with Asian stock markets gaining, albeit modestly so for the most part, with the main Chinese indexes lifting out of negative territory in the first hour of trading after the lunch break. Japanese PM Abe won a leadership challenge by a landslide, as expected, which puts him on track to becoming Japan’s longest serving prime minister. In the bigger view, USDJPY is currently trading in the upper reaches of a broadly sideways range that’s been unfolding for some 10 weeks now. Great odds have been placed for a sustain move downward than for there being a sustained move upward as China looks to be digging for trade-war escalation (at least until after the midterm elections in the US), which could lead to an increased safe haven premium being put on the Yen. USDJPY has resistance at 112.44-45, and support at 111.77-80.
Charts of the Day
Main Macro Events Today
- SNB Rate & Monetary Policy – Expectations – The SNB is widely expected to maintain its expansionary policy, with the deposit rate to be left -0.75% and the range for 3 months Libor at -1.25% to -0.25%. The central bank also expected to reiterate that it will “remain active in the foreign exchange market as necessary while taking the overall currency situation into consideration”.
- UK Retail Sales – Expectations – The Retail sales are anticipated a 0.2% m/m contraction in August, correcting after rising 0.7% m/m in the month prior.
- US Philly Fed Manufacturing Index – Expectations – The Philly Fed index should rise to 19.0 in September, from a 2-year low of 11.9.