FOREX: USDJPY Accelerates Towards 156.00 Following Katayama/Ueda Meeting
Nov-19 10:13
- USDJPY rises through yesterday's highs to hit a new cycle high on Finance minister Katayama possibly suggesting JPY weakness is not the highest priority, saying she "did not specifically talk about FX" in today's meeting with BoJ Governor Ueda.
- Price action takes the pair above 155.89, the Feb 3 high, while more meaningful resistance is seen at 156.75, the Jan 23 high. For EURJPY, targets rely on technical projections, with 180.37, 181.01 and 181.70 the next levels of note based on the Jul 31 - Sep 29 - Oct 2 price swing.
- The likes of AUD (-0.35%) and NZD (-0.49%) are underperforming on the session, amid the ongoing concerns for risk and major equity indices consolidating near recent lows. Recent weakness in AUDUSD highlights a clear bear threat, reinforcing a short-term bearish signal on Nov 13 - a shooting star (inverted hammer) candle formation. NZDUSD cycle lows are located at 0.5606.
- UK CPI printed roughly in line with expectations, which may lower the bar for a December cut a touch, however, overall the print should not have much of an impact for policy over the medium term. While the BoE will get the next round of CPI data under embargo on the Monday before the next meeting, the main risk event for BoE policy ahead continues to be next week's budget.
- Moving average studies in GBPUSD remain in a bear-mode condition and continue to highlight a dominant downtrend. The bear trigger remains at 1.3010, the Nov 4 and 5 low. Key short-term resistance for the pair meanwhile stands at the 1.3198 20-day EMA.
- Nvidia earnings incl. guidance have the potential for an impact on FX, especially given recent caution around AI valuations. Fed's Logan, Miran, Barkin, and Williams are on the calendar, alongside the October FOMC minutes. US September Payrolls will headline Thursday.
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JAPAN: Coalition Agreement Shows Prioritization of Political Stability
Oct-20 10:09
First comments from LDP leader as her party forges a coalition deal with Ishin shows that political stability is to be a priority, but stops well short of detailing any major fiscal measures, noting that the "funding issue not likely finalized this Diet session".
Instead, the coalition deal details the following the as the first policies under the new LDP-Ishin coalition:
- Restarting nuclear reactors
- Cutting the number of parliamentary seats
- Use of fiscal policy to boost investment
- Upcoming Diet session to be "about the economy"
- Ad-hoc policy coordination between coalition partners
EQUITY OPTIONS: Large outright BNP Put seller
Oct-20 10:07
BNP (19th Dec) 60p, sold at 1.15 in 16k.
EUROZONE DATA: Foreign Appetite For EZ Debt Dwindled In August [2/2]
Oct-20 09:57
- On the financial account side, there were some large swings in portfolio net flows in August, including for equity flows after three mild months. The following figures are all on a non-seasonally adjusted basis:
- Debt net outflows jumped to E55bn in August - the largest since Dec 2022 – to reverse three months of inflows summing to E52bn. (Note that we write from a currency perspective as opposed to the charts below which stick to the BPM6 basis)
- This switch to debt outflows came as net acquisition of assets bounced back to E58bn whilst the net incurrence of liabilities narrowed to a small E3.5bn.
- On the latter, prior months had seen far larger foreign appetite for Eurozone liabilities, including E75bn in May and E82bn in June. August can be a small month for foreign net flows into Eurozone debt liabilities but the E3.5bn still compares with E13bn in Aug 2024, E14bn in Aug 2023 and E25bn in Aug 2022.
- Equity saw large inflows meanwhile, with E55bn in Aug the largest since E75bn in Feb and before that Dec 2023. Domestic investors shied away from overseas investments (a net pullback of E2.5bn in further backtracking from a E53.5bn net investment in June) whilst foreign investors saw increases appetite for Eurozone equity with the E52bn the highest since Feb.
