Friday 21st November: European Open Briefing

Global Markets:

  • Asian stock markets: Nikkei up 0.80 %, Shanghai Composite rose 0.60 %, Hang Seng gained 0.20 %, ASX down 0.20 %
  • Commodities: Gold at $1193 (+0.20 %), Silver at $16.26 (+0.75 %), Crude Oil at $76.28 (+0.60 %)
  • Rates: US 10 year yield at 2.335, UK 10 year yield at 2.103, German 10 year yield at 0.800

News & Data:

  • Japan’s Finance Minister Taro Aso says weakening of the JPY has been too fast; speed of FX changes has effects
  • Aso says FX rates up to the market, not something where we intervene

Markets Update:

USD/JPY fell from 118.00 to a low of 117.35 on comments from Japanese Finance Minister Aso that the Yen weakening has been too fast, but the move has been almost fully retraced as we are heading into the London open. Comments from Japanese officials about the Yen are likely to increase should the USD/JPY rise further, but they rarely have a lasting impact. However, since the USD/JPY long trade is very crowded, it remains very vulnerable to any USD-negative headlines and sharp declines shouldn’t be surprising. It should be kept in mind that the pair has rallied over 1000 pips in just one month.

Meanwhile, EUR/USD and GBP/USD continue to consolidate in a range, though with some choppy price action as we had a fair number of data releases in the past 24 hours. The key levels to watch for in EUR/USD are 1.2440 and 1.26, with stops in good size building on each side. In Cable, bulls will need a clear break above 1.5740 to regain some strength, while 1.5590 remains the key support level.

The commodity currencies bounced a bit with the AUD/USD back above 0.86 and NZD/USD slowly approaching the 0.79 level. The focus will be on USD/CAD as Canadian inflation numbers will be the main data releases today. 1.1260 and 1.14 are the key levels.

Upcoming Events:

  • 13:30 GMT – Canadian CPI (-0.3 % m/m, 2.0 % y/y)
  • 13:30 GMT – Canadian Core CPI (0.2 % m/m, 2.2 % y/y)

Source:: Friday 21st November: European Open Briefing

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