FOREX: JPY Weakness Stands Out, as Markets Looks for Inflection Point
Feb-12 10:13
- The JPY's overnight step lower stands out among G10 FX Wednesday, headlined by USD/JPY's rally back above Y153.00, closing in on the first major resistance at 154.46. Clearance here would be bullish. Despite pulling back from the morning highs, EURJPY remains 0.8% higher today as the cross extends the rebound from Friday’s low. While the move higher is allowing a recent oversold condition to unwind, the impressive recovery reached as much as 406 pips, perhaps exacerbated by a short-term positioning squeeze ahead of US inflation data. Furthermore, the hawkish ECB repricing and strength for European equities will have provided additional tailwinds.
- Meanwhile, GBP/USD's strong rally off yesterday's lows means the pair has now retraced over 50% of the post-BoE decision losses, putting the price within 100 pips of last week's highs. This signals that markets are taking Mann's views at face value this week - and that her vote for 50bps last week isn't the beginning of series of votes for aggressive easing given her preference for restrictive policy (we gauge bank rate as being ~100bps above her top estimate of neutral, therefore leaving little room for sizeable cuts).
- In contrast with JPY, CHF is firmer against all others in G10 - benefiting from the unwind of the sharp pullback in the CHF/JPY cross over the course of 2025. Moves come ahead of the January Swiss CPI print, at which markets expected the Y/Y inflation release to retreat further - hitting 0.4% and the lowest rate since early 2021.
- The US inflation print takes focus for the rest of the day, with markets anticipating a moderation in inflationary pressures for January - but the release could be muddier than usual due to the concurrent posting of annual revisions for inflation. Central bank speak also comes through thick and fast, as Powell faces a second appearance in front of lawmakers on top of appearances from BoE's Greene, ECB's Nagel and Fed's Bostic.
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EURIBOR: EURIBOR FIX - 13/01/25
Jan-13 10:07
EURIBOR FIX - EMMI/Bloomberg
- 1W 2.91500 -1
- 1M 2.85000 1.1
- 3M 2.78500 1.9
- 6M 2.65500 1.4
- 12M 2.57600 1.2
FOREX: EUR & GBP Extend Declines, Weak Risk Sentiment Weighs on Cross/JPY
Jan-13 10:03
- The continued post-NFP themes of a weaker Euro and Pound have continued early Monday, with downside momentum picking up in recent trade. Weak risk sentiment continues to boost the Japanese yen, prompting some significant declines for cross/JPY to start the week.
- EURUSD has traded below the 1.02 handle, registering fresh cycle lows for the pair at 1.0178. With the bearish trend sequence intact, analysts will now look to 1.0138, the 1.764 projection of the Sep 25 - Oct 23 - Nov 5 price swing as the next target for the move.
- With higher European NatGas prices providing additional single currency headwinds to the aforementioned equity weakness, EURJPY is now down 0.95% on the session and is approaching the 160.00 mark.
- For sterling, 1.2100 has so far held for cable, however the pair is down 0.85% as the negative backdrop for UK assets continues to permeate. We highlighted last week how 190.60 was the first major target for the move in GBPJPY (shown below), a trendline drawn from the Aug low. This trendline has now given way, with the pullback from the Dec 30 highs extending to 4.5%. Given this development, 188.09 will now be in focus, the Dec 03 low.
US-RUSSIA: Kremlin: No Specific Preparations Underway For Putin-Trump Meeting
Jan-13 09:56
Reuters reporting comments from Kremlin spokesperson Dmitry Peskov, stating that there are “no specific preparations” underway for a meeting between Russian President Vladimir Putin and US President-elect Donald Trump, appearing to counter Trump, who said at a press conference last week: “[Putin] wants to meet, and we are setting it up”.
- Peskov said on a potential Putin-Trump meeting: “There is only an understanding of the political will – we shall watch the situation.”
- On conditions for a ceasefire in Ukraine, Peskov said: “The issue of security guarantees for both Ukraine and Russia is an integral part of any possible settlement of the Ukraine conflict.”
- On US sanctions enacted on Friday, described by White House official Daleep Singh as “the most significant sanctions yet on Russia’s energy sector,” Peskov said: “It is clear that the United States will continue to try to undermine our companies… such decisions are bound to destabilize global energy, oil markets.”
- Peskov added: “We will monitor the situation and configure the companies' activities… We will seek to minimise the impact of these sanctions.”
- In a call on Friday, US President Joe Biden updated Ukrainian President Volodymyr Zelenskyy on US efforts to “surge support to Ukraine and strengthen its position vis-à-vis Russia.”
- Semafor reports that the new US sanctions “will severely curb Russian fossil fuel exports to India and China”, forcing India and China “to look to the Middle East, Africa, and the Americas for alternatives.”
