Forex news for Asia trading Friday 7 July 2017
- BOJ says no bids tendered for its fixed rate operation
- Reports of hacking attempts in the US - could pave way to disrupt US electric grid
- More (again) on USD/JPY higher as Bank of Japan boosts bond buying
- More on the BOJ JGB buying
- FT: Australia forecasts iron ore to fall below $50 by 2018
- PBOC sets USD/CNY mid-rate today at 6.7914 (vs. yesterday at 6.7953)
- BOJ bought 500 bn yen of 5 to 10 yr JGBs (vs. 450bn prior operation)
- It looks like things have calmed on the Korean peninsula - Yonhap goes bananas
- NFP day - Goldman Sachs preview
- USD/JPY on the move, ticking a wee bit higher
- Japan - Labour Cash Earnings for May: +0.7% y/y (expected 0.4%)
- Fed's Fischer: Fiscal policy uncertainty may be hampering investment
- Australia - Construction PMI for June: 56.0 (prior 56.7)
- US Defense Sec. Mattis - reaffirms US ' ironclad' commitment to Sth Korea
- Gold copping it - off $4 in a sharp drop
- Australia politics: Court challenge could "potentially bring down the government"
- Ray Dalio on central banks - "the end of one era and the beginning of another"
- Oil - New measures against Qatar
- Japan - European Union free trade deal - where we at?
- NFP - "The key number in the jobs report isn’t the one you might expect"
- Forexlive Americas FX wrap: EUR the strongest currency as traders think QE taper
- Fed's Fischer speaks today - this will be just as (more?) important than NFP
- Japan press - foreign investors anticipate stimulus spending from PM Abe
- US stock indices slide to the downside. Close nearer the lows.
- Economic data due from Asia today (plus a Federal Reserve speaker)
- The early Asia time reclaimed its crown as flash crash central today :-D
Silver was an early mover, plummeting in seconds and dragging gold down around $4 (and more) with it. There was little in the way of news to drive such moves so the explanations fell back on the old favourites of a fat finger &/or algos and what-have-you. Take your pick. The move came at a time of day close to the most illiquid of the 24 hour cycle, just after 8am in Tokyo and just after 7am in Hong Kong and Singapore. We don' t always get moves at this time but when we do ... look out - they can be stretched by a lack of readily available market. Its worth being aware that with thin liquidity conditions prevailing at this time markets can be ripe for pushing price moves, which may provide a profit incentive for those able to work these moves.
Silver has come back from its lows (it did so very quickly) but is still below $16. Gold tried a bounce or two but ran into sellers each time and while it is above its sub 1220 lows its not too far above $1221 as I update.
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A little later on in the session we saw USD/JPY start to edge higher. JGB yields were on the rise, with the 10 year above 0.105%. The Bank of Japan have a zero percent target for the 10 year as part of their Yield Curve Control (YCC) policy; the Bank has said they'll buy (or offer to buy) bonds (JGBs) to push the yield back toward target. The currency market reads this as, in effect, a policy that will weaken the yen.
And thus it was today - the BOJ announced it would buy an unlimited amount of 10yr JGBs at 0.11%; USD/JPY took off higher, topping out (eventually) above 113.80.
As it happened:
- USD/JPY on the move, ticking a wee bit higher
- When the Bank of Japan did make their announcement, USD/JPY gained further
- More on the BOJ JGB buying
- More (again) on USD/JPY higher as Bank of Japan boosts bond buying
- BOJ says no bids tendered for its fixed rate operation
Yen crosses are higher alongside.
(this recap via Reuters): A statement from an official at the BOJ later confirmed the Bank increased its government debt purchases and offered to buy debt at a fixed yield in response to a large rise in long-term yields. The operation has managed to send the 10-year JGB yield from its earlier five-month high of 0.105% to 0.085% for the day. This is the 3rd time the BOJ has conducted its special operation to buy JGBs at a fixed yield level to stem rises in JGB yields since the central bank unveiled its "yield curve control" policy last September.
EUR, CHF, GBP are all little changed against the USD, it was a yen day really (with a sliver lining ... I'll get my coat)
AUD/USD, too - little changed. NZD/USD has edged a few ticks net higher but there isn't too much in it. USD/CAD is higher, oil price weakness not helping CAD.
Regional equities:
- Nikkei -0.27%
- Shanghai -0.22%
- HK -0.37%
- ASX -1.19%
Still to come:
- US employment to be released on Friday. What to expect?
- NFP day - Goldman Sachs preview
