FOREX: USDJPY Maintaining Firmer Short-Term Tone
Mar-19 15:59
- Waves of post-BOJ volatility have resulted in another 100 pip range for USDJPY on Wednesday, with the strength for US equities helping the pair consolidate towards the upper end of the day’s range as we approach the Fed.
- The pair maintains a firmer short-term technical tone following the breach of the 20-day EMA, signalling potential for a climb towards the 50-day EMA, at 151.28. Note that the Mar 3 high is also at 151.30, and clearance of both levels would be required to highlight a stronger reversal. Overall, moving average studies remain in a bear-mode set-up, highlighting a dominant downtrend - this suggests short-term gains are corrective.
- HSBC think the JPY may not be able to completely fulfil its potential as a “safe haven” since Japan is also exposed to upcoming US tariff risks and because of the stretched net long JPY positioning. All in, they see USD-JPY moving sideways or even falling slightly in the near-term before rising later in 2H when the US economy overcomes growth concerns and the BoJ is closer to its neutral rate range.
- It is worth noting that tomorrow marks a local holiday in Japan, before national CPI data is due during Friday’s APAC session.
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US-RUSSIA: Russia In Business-Like Mood Ahead Of Ukraine Talk - Kremlin Aide
Feb-17 15:33
Reuters reporting comments from Kremlin foreign policy aide Yury Ushakov stating that the Russian delegation is in a “business-like mood” ahead of preliminary Ukraine talks with the US in Saudi Arabia on Tuesday. Ushakov adds that Russian sovereign wealth fund chief Kirill Dmitriev may join the Russian delegation, "to discuss any economic questions that might arise".
- Ushakov appeared to dial down expectations of immediate deliverables from the talks, stating that tomorrow’s meeting is a bilateral discussion rather than Ukraine-focused talks as the US “has yet to appoint its chief negotiator for the Ukraine talks”
- Despite the unclear format of the talks, the Washington Post writes: “The high-level encounter, just weeks after Trump’s return to office, represents a stunning departure from America’s previous stance toward Russia,”
- US Secretary of State Marco Rubio held an “introductory” call with his counterpart, Russian Foreign Minister Sergei Lavrov, on Saturday, with Lavrov telling reporters it is time to put an end to an “abnormal period” of US-Russia relations.
- Wires noted a short time ago that French President Emmanuel Macron spoke with US President Donald Trump on the phone, ahead of a meeting between European leaders at the Elysee Palace to discuss a European response to Trump’s actions on Ukraine.
OPTIONS: Expiries for Feb18 NY cut 1000ET (Source DTCC)
Feb-17 15:32
- EUR/USD: $1.0300(E1.7bln), $1.0340-41(E1.2bln), $1.0425(E713mln), $1.0440-50(E1.5bln), $1.0500(E511mln)
- USD/JPY: Y154.00($1.1bln), Y155.00($806mln), Y156.00($674mln)
- USD/CAD: C$1.4295-00($1.6bln)
FED: Core Bank Regulation Rules Ripe For Review - Bowman
Feb-17 15:28
- Bowman (voter, hawk and a prime candidate for the next Vice Chair for Supervision role) said in prepared remarks that there is a troubling trend of inaction with bank supervision and that Fed rules addressing core bank issues are “ripe for review”.
- Her comments follow those earlier in the month that helped sparked a sizeable widening in long-dated US swap spreads having talked about amending the leverage ratio of the G-SIB surcharge.
- Her mon pol-focused comments meanwhile covered similar ground to those from Jan 31.
- "Policy is now in a good place, allowing the Committee to be patient and pay closer attention to the inflation data as it evolves," Bowman said. "In my view, the current policy stance also provides the opportunity to review further indicators of economic activity and get further clarity on the administration's policies and their effects on the economy."
- Bowman said the economy is strong and the job market is close to full employment. Core inflation, for its part, is "still somewhat elevated, but has appeared to resume its downward path, and my baseline expectation has been that it will moderate further this year."
