Daily Financial Markets Update: Yen Pairs Advance on Intervention Talk

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Yen pairs were mostly higher in recent trading sessions after Japanese Finance Minister Aso unleashed another round of intervention threats, warning that they are ready to act if the currency appreciates too sharply. USDJPY popped up to the 108.85 level, EURJPY is up to the 123.80 level, GBPJPY is testing the resistance at the 157.00 handle, and CADJPY is up to 84.00.

Data from Japan came in mixed, as average cash earnings rose 1.4% versus the projected 0.6% gain. However, the consumer confidence index fell from 41.7 to 40.8 as expected, indicating weaker sentiment and possibly slower spending.

Commodity currencies weaker after Chinese trade data

The Aussie and Kiwi were also sliding in Monday’s trading, weighed lower by the 10.9% slump in imports to China. The headline reading showed a wider surplus of 298 billion CNY versus the projected 250 billion CNY figure and the previous 195 billion CNY surplus.

AUDUSD dipped to the .7300 mark before recovering to .7350, NZDUSD is breaking below .6750, AUDJPY is down to the 80.00 handle, and NZDJPY is down to 73.50. EURAUD is up at 1.5520, EURNZD is up at 1.6870, and EURCAD is up to 1.4750.

Earlier today, New Zealand Finance Minister Bill English hinted that the RBNZ might implement additional measures to curb lending activity in order to cool the Auckland housing market. In their recent rate statement, RBNZ policymakers acknowledged that housing inflation has still been climbing and is preventing them from lowering their benchmark rate further. The RBNZ Financial Stability Report is up for release later in the week and is expected to contain actual details on potential adjustments to the loan-to-value ratio controls or additional macro-prudential tools.

Pound longs pared ahead of BOE Super Thursday

The pound drew a bit of support from anti-Brexit sentiment last week but economic data and policy expectations seem to be taking center stage once more now that the BOE statement is approaching. The UK central bank is also set to print their monetary policy meeting minutes and their updated economic forecasts in the Inflation Report on Thursday.

GBPUSD is consolidating above the 1.4400 handle, EURGBP is holding on to .7900, GBPAUD is trading at 1.9640, GBPCHF is stuck at 1.4000, and GBPNZD is stalling at 2.1350. No actual monetary policy changes are expected from the BOE but downgrades to growth and inflation might be seen, especially since the latest batch of PMI readings all fell short of expectations.

 

To contact the reporter of the story: Samuel Rae at samuel@forexminute.com

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