Headlines:
- Japanese yen jumps across the board on suspected intervention
- USD/JPY with a sharp drop lower after crossing the 159.00 mark earlier
- Japan finance minister Katayama declines to say if they intervened in the FX market
- BOJ governor Ueda says will place larger focus on inflation in making policy decisions
- BOJ governor Ueda says will closely coordinate with government on the bond market
- Germany January flash manufacturing PMI 48.7 vs 47.8 expected
- France January flash services PMI 47.9 vs 50.5 expected
- Eurozone January flash services PMI 51.9 vs 52.6 expected
- UK January flash services PMI 54.3 vs 51.7 expected
- UK December retail sales +0.4% vs -0.1% m/m expected
Markets:
- GBP and AUD lead, NZD lags on the day
- European equities slightly lower; S&P 500 futures down 0.1%
- US 10-year yields down 2.2 bps to 4.229%
- Gold down 0.2% to $4,924.53
- WTI crude oil up 1.6% to $60.34
- Bitcoin down 0.1% to $89,130
The Bank of Japan (BOJ) decision today went as expected and so did Ueda’s press conference for the most part. The Japanese central bank governor didn’t offer much on what the BOJ would do to help with the yen currency plight and that triggered some selling pressure as we got into early European trading.
USD/JPY moved up from 158.60 to 159.20 before being sent for a quick trip lower to 157.33 in a span of just five minutes. 📉
It is suspected that Tokyo officials performed a ‘rate check’ of sort, solidifying their intentions to intervene in the market to defend the yen currency. It would seem that they do not want to let this go to 160 before taking action.
The move isn’t as strong as you tie to any actual intervention with USD/JPY quickly bouncing back to settle around 158.00-30 currently. Price action is still volatile but the dip lower widely suggests that this was a ‘rate check’ at most.
In any case, prepare yourselves for actual intervention to follow. That was the case back in July 2024 and then in September 2022 as well. Ironically, the last time the MOF actually stepped in was also on a Friday (12 July 2024 at 2100 GMT). 👀
Besides that, the major currencies space didn’t get up to much with the dollar still reeling from the continued selling this week. EUR/USD is down slightly but continues to hold above 1.1700 with USD/CHF sitting closer to 0.7900, keeping around the 2025 lows still.
Some positive UK data is helping the pound get a minor lift with GBP/USD up 0.2% to 1.3520 while AUD/USD is also seen higher by 0.2% to 0.6850 on the session.
In other markets, equities are keeping more cautious in the final stretch of the week after the rebound in the past few sessions. US futures are down while European indices are also holding slightly lower, with overall optimism still limited by uncertainty on the geopolitical and economic fronts.
I mean, who is to say what Trump will be up to next week? 🤵🏼🇺🇸
As for commodities, gold is down 0.2% to $4,924 while silver is up 2.7% to $98.75 (briefly hit $90 for the first time ever) as precious metals continue to stay hot overall ahead of the final week of January. 🔥
The former is continuing to eye the $5,000 level with the latter having its sights on $100, both being key psychological levels to be mindful of. That especially with the January seasonal tailwind also starting to meet its end next week.
