JPY news - page 19
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Japan consumer confidence index Sept 43.0 vs 41.5 exp
Japan September consumer confidence index 4 Oct
2nd straight mm rise.
Japan - Nikkei Services PMI 48.2 (prior 49.6) & Composite 48.9 (49.8)
The Nikkei / Markit services and composite PMIS for Japan, September.
Japan press: "Corporate Japan tries to deflect pressure on wage hikes"
Both the Japanese government and the Bank of Japan are urging wage increases as a path out of deflation
JPY: H-F Models Point To USD/JPY At 104.50; Fade CAD/JPY Into 79.50
Markets have also been closely watching the moves in JPY. USDJPY has rallied for seven consecutive sessions, now pushing above 104. Given the softer local data this week and the lack of easing offered from the BoJ we think the move is more technical.
Indeed, the JPY move looks more consistent with the shift in risk appetite, owing to the pick up in local equities and marginal gains in the S&P. Recall that the correlation between USDJPY and NKY dropped quite significantly ahead of the last BoJ meeting. For instance, the 20-day rolling correlation of USDJPY and the Nikkei (daily % changes) peaked in July around 0.90 but has since fallen to zero. This is probably an indication that any BoJ policy shift was more supportive of risk appetite than negative for the currency. Even so, the correlation has started to pickup again and now sits at 0.17.
The shift in the US presidential polls following the debate has helped reduce pressure on safe haven currencies, but we also think valuation and position have led to the squeeze in JPY.
Our high-frequency fair value models show USDJPY at 104.50, suggesting a bit more upside in CADJPY but we like fading the move near 79.50.
source
Expect More Profit Taking In USD/JPY
It was a busy week in the foreign-exchange market that ended with a bang on Friday. We’ll start by talking about the U.S. dollar and nonfarm payrolls but the big story of the day/week/month is the British pound. Sterling dropped more than 5% in the blink of an eye during the Asian trading session on low liquidity and thin trading conditions. Unfortunately the existence of algos and leveraged players exposes the market to a greater frequency of big moves like these. In many ways, the shockingly fast decline overshadowed the nonfarm payrolls report by causing more volatility in currencies. However the flash crash may turn out to be just that, whereas the U.S. jobs report should have a more lasting impact on the dollar and Fed policy.
For the second month in a row, U.S. labor data disappointed in a very big way. Only 156K jobs were created in September, down from a revised 167K number in August. This sluggishness in job growth drove the unemployment rate up to 5%, the first increase in 6 months. Average hourly earnings growth increased, but less than economists anticipated. Given how quickly and aggressively USD/JPY appreciated, Friday’s report was soft enough for profit taking. The Fed won’t be able to justify a December rate hike if NFPs fail to rebound to 200K or more next month. This thinking should weigh on the dollar in the week ahead and we would not be surprised if USD/JPY found its way below 102.40 and even down to 102. However if USD/JPY gets down to 102, it becomes an attractive buy because the Federal Reserve will still be raising interest rates and December remains an option -- we just need to shake out some longs before that happens.
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Kuroda hints at lower short and long-term rates
Bank of Japan Governor Kuroda spoke in Washington
BOJ leader Haruhiko Kuroda said on Saturday that if needed, he won't hesitate to lower rates further but also said there will be no significant changes in the management of the balance sheet under the new policy framework.
Last month Kuroda and other BOJ policymakers introduced 'yield curve control' in an effort to keep 10-year plus yields above zero and a steeper yield curve.
He said Saturday that an excessively low, flat yield curve could have weakened the transmission of monetary policy by squeezing bank profitability.
Kuroda also took on some alternative policies that were floated in the press. On the idea of raising the price target to heighten inflation expectations, he called it "naïve."
Overall, he said the policy will remain focused on managing the yield curve and that the amount of purchases doesn't matter so long as that is achieved.
Currently, he said it's not necessary to cut rates but that may become necessary if Japan faced a shock.
On the yen, he said the BOJ wasn't targeting any exchange rate levels but that they are mindful that currency moves affect the economy and prices.
BOJ's Kuroda comments recrossing the wires
USD/JPY: Staying Long Into FOMC Minutes
Columbus Day keeps the US quiet, and the news front is mostly limited to FOMC Minutes on Wednesday (how close did they get to a rate hike?) and retail sales on Friday.
The key this week is whether the bear market in Treasuries resumes amid the lack of news. If we do see yields edge higher without obvious drivers, and particularly if that doesn’t undermine global risk sentiment, USD/JPY gets supportUSDJPY running into sell interest around 104.00 again
The pair has been underpinned in Asia but now finding a few sellers 11 Oct
General USD demand has seen USDJPY camp above 103.50 in Asia trading and still looks underpinned but running into sell interest around 104.00 again.
Hearing talk that there is option related supply around 104.00 related to contracts rolling off on 13 Oct as I highlighted yesterday.
Highs so far of 104.04 and then a dip below 103.90 sees us back 103.98 again.
More sell interest at 104.20 from Japanese exporters.
A quick look at the chart shows it's proved a good resistance area for a while now so worth going short up here on a risk-reward basis but it may not retreat immediately given current price action/USD demand.