FX News Today
FX Action: USDJPY has settled around 113.00, above the eight-session low printed yesterday at 112.82. Ranges have been narrow in currency markets, despite risk appetite remaining on firmly to the negative side of the dial. The MSCI Asia-Pacific (ex Japan) index hit a 17-month low. The IMF cut its growth forecasts for both this year and next, including downgrades of the outlooks for the US, Europe and China. The PBoC set the USD-CNY reference rate at 6.9019. Often times, such a backdrop would see the Yen appreciate, though the rise in US over Japan yield differential appears to be providing offsetting support for USDJPY. The 10-year US Treasury yield has today lifted to a fresh 7-year highs above 3.25%.
Asian Market Wrap: 10-year Treasury yields are up 0.5 bp at 3.239%, Treasury yields climbed 0.1 bp to 0.146%, while stocks traded mixed during the Asian session. Chinese and Hong Kong markets stabilised after yesterday’s sharp correction in Chinese stocks, that were partly driven by catch up trades. A stronger yen meanwhile weighed on Japanese equities. IMF warnings on the global growth outlook meanwhile lifted pressure on bonds, although the IMF referred mainly to growth outside the US and tax cut fuelled expansion in the US will continue to keep the Fed on a tightening path. Still, some are expecting the BoJ to act more aggressively to curb the uptick in long yields. Topix and Nikkei are currently down -1.84% and -1.30% respectively. The ASX fell -0.97% though, and U.S. stock futures are also down while oil prices climbed higher and the front end Nymex future is trading at USD 74.67 per barrel.
Charts of the Day
Main Macro Events Today
- Canadian Housing Starts – Expectations – The September starts expected to improve to a 210k pace in September from 201.0k in August.
- MPC Member Broadbent Speech – BOE Deputy Governor Ben Broadbent is due to testify on the use of the Retail Price Index before the Economic Affairs Committee, in London.
- Gov Council Member Wilkins Speech – Bank of Canada Senior Deputy Governor Wilkins appears in a panel at the Empowering Women in the Workplace Seminar at an IMF event in Bali Indonesia.