It has been a very volatile session in Asia for the JPY and the Nikkei as we head towards the business end of the week for financial markets. USD/JPY continued to its move higher, breaking above 115 to make a fresh seven-year highs above 115.50. The Nikkei traded above 17,000 but this all changed in a market move that saw extreme volatility as the Nikkei dropped 1.6% in minutes. This caused the JPY to strengthen some 110 points against USD in the same time period as traders in the region sighted extreme liquidity issues.
The AUD initially traded higher as the market digested the Australian jobs data. But the market soon lost interest as the unemployment rate came in as expected at 6.2%. The unemployment change was also close to the consensus reading of 20k at 24.1k.
Today will be all about the central banks, and in particular ECB President, Mario Draghi, following criticism earlier in the week from the usual unnamed ‘ECB sources’ who sighted that the target figure given by Mario of 1 trillion euro to expand the ECB balance sheet has put increasing pressure on the governing council. The BoE meeting is likely to be a non-event today as the market focus will now be next week’s quarterly inflation report, which is likely to dominate the near term direction for sterling. The consensus view is that despite the surprise action taken by the BoJ last Friday increasing the pressure on the ECB to take further stimulus measures, the governing council are likely to refrain from any action until a consensus majority is established within the council. This may never happen whilst Bundesbank governor Weidmann remains a staunch opposition to sovereign debt purchases. Today, I expect an unchanged policy decision from the ECB with a very dovish tone from the not-so-super Mario in the subsequent press conference.
Supports 1.2440-1.2395-1.2350 | Resistance 1.2540-1.2585-1.2610
Supports 114.00-113.85-113.15 | Resistance 115.50-116.00-117.25
Supports 1.5855-1.5785-1.5725 | Resistance 1.6025-1.6065-1.6125
StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.