FOREX: Sharp Reversal for AUDJPY as Equities Reverse Initial Optimism
Nov-20 17:53
- The first half of the session for currencies was characterised by the buoyant risk sentiment in the aftermath of the Nvidia earning report late Wednesday. Dynamics provided a positive backdrop for Cross/JPY to substantially extend recent strengthening trends. Equity sentiment attempted to extend following the delayed September payrolls report, however, sharp reversals then ensued.
- The roughly 7% turnaround for Nvidia dragged the major US indices into negative territory, and in tandem, the likes of AUDJPY and NZDJPY have sharply reversed course. For AUDJPY specifically, spot briefly pierced the November 2024 high, placing the cross at its highest level since July 2024. Amid the turnaround for stocks, AUDJPY has reversed 1.15% to now trade 0.45% lower on the session.
- Moves for the broader dollar index have been extremely contained, with Fed pricing for the December rate decision holding marginally in favour of a policy hold, and several banks adjusting their calls for that meeting despite the latest US unemployment rate rising to 4.44%.
- DXY highs of 100.36 matched the recovery highs from earlier in the month, keeping short-term bullish conditions intact for the greenback.
- The dollar’s resilience remains most notable against the yen, with USDJPY looking to post its highest daily close since January, currently trading at 157.45. Highs for the session fell just short of the 158.00 handle, and it is worth noting that the pair has entered overbought territory. A pullback would be considered corrective. Given the consistent verbal jawboning in recent weeks, we would expect further rhetoric from MOF officials given the sharp extension lower for the JPY this week.
- Japan National CPI, UK retail sales and Eurozone flash PMIs headline Friday’s data calendar.
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PIPELINE: Corporate Bond Update: Alberta Expected Wednesday
Oct-21 17:52
- Date $MM Issuer (Priced *, Launch #)
- 10/21 $5B *World Bank 5Y SOFR+38
- 10/21 $2B *Kingdom of Sweden 3Y SOFR+26
- 10/21 $1.5B Albertsons 5.5NC2 5.625%a, 8.5NC3 5.875%a
- 10/21 $800M #ASB Bank $500M 5Y +60, $300M 5Y SOFR+90
- 10/21 $Benchmark Kazakhstan 5Y +90a, book over $3.5B
- 10/21 $Benchmark Oman Electricity 5Y Sukuk investment calls
- Rolled to Wednesday:
- 10/22 $Benchmark Alberta 10Y SOFR+85a
US: Americans Less Confidence GOP Is Party To 'Keep Country Properous' - Gallup
Oct-21 17:36
A new survey from Gallup has found that, “Americans continue to see the Republican Party as better than the Democratic Party for protecting the U.S. from international threats, 48% to 41%, though the margin has narrowed since last year.”
- The survey, which began before the government shutdown and the Israel-Hamas ceasefire deal, “also finds the GOP has lost its advantage as the party better for keeping the country prosperous.
- “In both cases, Republicans’ weaker position is mainly the result of fewer Americans than a year ago preferring the Republican Party for these responsibilities, not because of increased confidence in the Democratic Party to handle them.”
Figure 1: “Looking ahead for the next few years, which political party do you think will do a better job of ...?”
Source: Gallup
US: FED Reverse Repo Operation
Oct-21 17:33
RRP usage recedes to $4.699B with 10 counterparties this afternoon from $5.931B Monday. Compares to $3,516B on Tuesday, Oct 13 (lowest level since early April 2021) & this year's high usage of $460.731B on June 30.
