JPY - BER News
Japanese Yen – Market News
Shinzo Abe’s Liberal Democratic Party was the decisive winner in this weekend’s Japanese election, paving the way for a continuation of “Abenomics” and extremely loose monetary policy in the world’s third largest economy. Consequently, the Japanese yen weakened on Monday to levels above 114 per dollar for the first time since July.
For Asia-Pac currencies, Thursday’s session was dominated by political nervousness in New Zealand and a busy economic calendar.
In terms of data, Japan kicked things off a little before 9am in Tokyo with the country’s latest trade figures. Export growth of 14.1% in the year to September matched market expectations, more or less.
The week ahead should be an interesting one for Asian financial markets, with the highlights being China’s 19th National Congress, the latest numbers for Chinese economic growth, the Bank of Korea’s monetary policy meeting and Japanese trade data.
Further to that, and to the events outlined below, investors should look with care to Federal Reserve speakers on Sunday and Wednesday (Asian time zones) and to Tuesday’s US data for industrial production, all of which may influence risk appetite and, of course, the dollar side of Asian FX pairs.
With the unsurprising exception of the Philippine peso – Asia’s worst performing currency of the year – Asia-Pac’s most actively traded currencies made gains against the US dollar on Tuesday.
Although limited, gains were somewhat easy to come by as risk appetite returned after the President of Catalonia, Carles Puigdemont, held off on formally declaring the region’s independence from Spain, and by doing so, stepped back from what had looked like the precipice of a constitutional crisis in Europe’s fourth largest economy.
Wow. What a confusing jobs report.
The most important economic data release of the month caused flip-flopping in the US dollar on Friday as a decline in US jobs was offset by solid readings for earnings growth and unemployment.
The US Bureau of Labor Statistics said on Friday that non-farm payrolls fell by 33,000 in September, against a market expectation heading into the release for an increase of 82,000 and against August’s increase of 169,000 (revised from 156,000).
It’s been a tough twenty-four hours for the Australian dollar.
The “Aussie” was hammered after Thursday’s woeful retail sales data, which showed that sales declined in August by 0.6% – the biggest fall in four years. To add insult to injury, previously released data for July was revised down to -0.2%, from 0.0%.
Saxo Bank’s head of FX strategy, John Hardy, has added his name to a list of prominent analysts predicting a difficult fourth quarter for the US dollar.
On September 27th, ABN Amro expressed its “strong conviction” on future dollar weakness and Nomura reaffirmed its “structural bearish view,” and now, one week later, we have Hardy, who says that the dollar is set to “top out” over the coming months and “continue its longer-term decline.”
The timing of these bearish dollar forecasts is surprising given that the US currency has appeared to turn a corner in recent weeks.
Currencies in Asia have begun the week slowly and also with contrasting performances against the FX majors.
Against the dollar, while all of Asia’s ten most active currencies have fallen marginally on Monday morning, many hold slight gains or remain unchanged against the euro. Little movement has been seen against the yen.