FOREX: USDJPY Uptrend Remains Intact as Takaichi - Ueda Meet Affirms Gradualism
Nov-18 10:32
- Ongoing weak risk sentiment underpins low yielding haven currencies JPY and CHF in a session seeing limited volatility so far. Markets await key official economic data reducing uncertainty about the macro picture - clearing up the Fed policy path for the rest of the year.
- CAD outperforms after PM Mark Carney secured passage of the first federal budget of his tenure, suggesting that despite external headwinds, the Canadian political environment will remain relatively stable in the short-to-medium term. Expectations for a further Bank of Canada cut in this cycle let alone December are pretty much eliminated by now, with the short-term outlook for USDCAD appearing bearish form a technical perspective. Firm core indicators in yesterday's CPI report, in conjunction with earlier stronger-than-expected labour market data have combined to pretty much eliminate expectations for a further Bank of Canada cut in this cycle.
- USDCAD is trading inside a bull channel drawn from the Jul 23 low. The top of the channel - currently at 1.4170 - provided a firm resistance on Nov 11. The subsequent move down highlights scope for a bear extension towards the base of the channel at 1.3893. Initial key support to watch is 1.3968, the 50-day EMA.
- USDJPY price action meanwhile confirmed the resumption of an uptrend and extension of recent gains, with sights on 155.53, a Fibonacci projection. Comments following the meeting between Japanese PM Takaichi and BoJ Governor Ueda did not move the needle, with Ueda noting that he told Takaichi that the Bank is operating a process of gradually adjusting its monetary easing, which the PM "seemed to acknowledge". Initial firm support in USDJPY would be 153.49, the 20-day EMA, a clear breach of which would signal scope for a corrective pullback.
- Fed's Barr and Barkin, the ECB's Pereira and Dolenc, as well as the BoE's Pill and Dhingra are scheduled to speak. Barkin is due to comment on the economic outlook having not commented directly on policy since the last Fed decision.
- The US data calendar is starting to pick up, with weekly ADP, November NY Fed services, weekly redbook retail sales, November NAHB housing index, August factory orders, and September TIC flows likely being released today ahead of tomorrow's UK CPI. A roughly inline UK inflation print with a non-inflationary budget may ensure key voter Bailey will support December cut, which could keep the pressure on GBP.
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LOOK AHEAD: US Week Ahead Headlined By Delayed CPI Report On Friday
Oct-17 20:51
- The September US CPI report will be released on Friday, delayed amidst the government shutdown but with the BLS making a special exception on social security payment considerations.
- Bloomberg consensus looks for headline CPI inflation at a rounded 0.4% M/M after 0.38% back in August and for Y/Y inflation to firm two tenths to 3.1% for what would be its highest since May 2024.
- Core inflation is seen at a rounded 0.3% M/M after 0.35% in August (exceeding the median unrounded estimate of 0.31%) and 0.32% in July. It’s expected to see core CPI inflation hold at 3.1% Y/Y having in August increased to its highest since February.
- Core details should see focus on both goods and services angles: underlying goods inflation has clearly firmed in recent months on tariff pressures although the median increase has currently seen a peak back in June, whilst services will be watched for any spillover after some strong recent non-housing readings.
- The report will come within the FOMC blackout period ahead of the Oct 28-29 decision, with a 25bp cut fully priced and likely needing a large surprise to alter this.
- As for broader inflation details, Fed Chair Powell this week confusingly suggested that we will have the September PPI report but the BLS had previously said “No other releases will be rescheduled or produced until the resumption of regular government services”.
US DATA: Latest Jobless Claims Estimates During The Shutdown
Oct-17 20:30
As noted earlier, MNI estimates initial jobless claims at a seasonally adjusted 218k in the week to Oct 11 and continuing claims at a seasonally adjusted 1929k in the week to Oct 4.
- To give a better idea of sensitivity around these estimates, which rely on estimates for some missing states, we note the below analyst estimates:
- Goldman Sachs have a central estimate of 217k for initial claims in a range of 211-225k, whilst they see continuing claims at 1917k in a range of 1885-1930k.
- JPMorgan meanwhile also see 217k for initial claims whilst they see continuing claims as having held constant at 1927k.
NATGAS: Venture Global in Talks with Ukraine for more LNG Deliveries, Reuters
Oct-17 20:28
Ukraine is seeking more cargoes from Venture’s Plaquemines facility as the embattled nation approaches the winter heating season, according to Reuters sources
- Venture is in talks with Ukraine’s DTEK to procure more LNG cargoes after a year of gas infrastructure attacks by the Russians.
- Venture Global CEO Michael Sabel met with President Volodymyr Zelenskiy on Thursday October 16.
- DTEK signed an agreement in 2024 for an undisclosed amount of LNG from the facility, as well as 2 mtpa from Calcasieu Pass Phase 2 currently under construction.
- Plaquemines currently has spare capacity to deliver more cargoes to Ukraine on the spot market, per Reuters.
- Plaquemines now sends out the second highest LNG volume in the US, with feedgas demand averaging 3.45 bcf/d according to MNI figures.
