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JPY

07 Jan 2024

A new year market reversal

• Market reversal. Late-2023 rally lost steam. Equities have given back ground over early-January, bond yields are higher, & the USD is firmer. AUD near ~$0.6725.• US jobs. Payrolls rose more than predicted in December. But stepping back there are signs conditions are loosening. Policy easing cycles will be in focus in 2024.• Event radar. Globally, the latest US CPI report is in focus (Fri AEDT). Locally, retail sales (Tues AEDT) & monthly inflation (Weds AEDT) are due. The late-2023 risk rally has lost puff over early 2024. Equities have given back ground over the first week of January (S&P500...

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19 Dec 2023

Santa rally continues

• Positive vibes. US equities posted another gain with the seasonal rally in full swing. Backdrop supported the AUD which touched its highest level since July.• USD softer. USD lost ground with the lift in USD/JPY on the back of a ‘dovish’ BoJ an exception. JPY underperformed with AUD/JPY up ~1.6% over the past 24hrs.• US inflation. PCE deflator (Fed’s preferred inflation gauge) due at the end of the week. A deceleration could reinforce rate cut pricing, weighing on the USD. The positive run across risk assets continued overnight. US equities posted another gain with the S&P500 (+0.6%) within striking...

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18 Dec 2023

BoJ in focus

• Holiday vibes. Quiet start to the week. US equities & bond yields a little higher. AUD continues to track near the top-end of its multi-month range.• Fed rhetoric. More Fed members tried to push back on rate cut pricing. PCE deflator (the Fed’s preferred inflation gauge) due at the end of this week.• Macro events. RBA minutes are due & the BoJ hands down its decision. No change expected, but there is a chance the BoJ lays the platform for future moves. It has been a quiet start to the final week before Christmas across markets. In contrast to...

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17 Dec 2023

Will the BoJ jolt markets?

• Mixed markets. Equities consolidated, long end yields dipped. USD clawed back ground against EUR & GBP. AUD hovering near the top of its range.• Fed push back. NY Fed Pres. Williams tried to curb the rate cut enthusiasm. But the die has been cast. Markets looking to price in the easing cycle.• Event radar. Locally, the minutes of the RBA meeting are due. Offshore, the US PCE deflator is released & the Bank of Japan meets. It was a mixed end to last week for markets. Macro-wise China’s November activity data was generally better than anticipated. Helped by stimulus...

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15 Dec 2023

The Bank of Japan is playing aggressive catch up.

In our opinion, relative interest rate differentials should continue to shift incrementally in the yen’s favour over the next year. While central banks appear set to maintain restrictive policy settings to ensure inflation is tamed, we doubt further interest rate hikes will be delivered. Indeed, with central banks evolving toward a more data-dependent and risk management-focused approach as growth slows, labour markets loosen, and inflation moderates, expectations about the next easing cycle should intensify. This is likely to see bond yields outside of Japan decline as in past cycles, when rates have fallen once it became clear the monetary tightening...

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