Manic Monday, Turnaround Tuesday and hopefully an ordinary Wednesday. The focus this week has been Japan and overnight that didn't change the Nikkei is up 2% and USDJPY opens at 147, the BOJ'S Uchida said 'we won't raise rates when the market is unstable' and the Deputy Governor comments emerge in the wake of efforts by Japan’s government and central bank to show a united front to restore calm to markets, amid growing criticism of last week’s abrupt monetary tightening.
USD/JPY is now trading close to the 147.00 level. This is a long way from Monday’s low of 140.25 and even further from the July high, close to 161.95. The sheer size of the moves seen in USD/JPY make it hard for the market to find the new trading band. Market pricing is still suggesting that the Fed could cut rates aggressively by the end of the year, remember there are only 3 more meeting. Whilst the US economic calendar is relatively thin this week, next week brings US PPI and CPI inflation data in addition to retail sales numbers. The following week brings the Jackson Hole symposium. We expect that by then the market will have a clearer view of Fed rate cut risks through to the end of the year and presently there is over 1% of cuts priced in.
In other markets Bitcoin rose 0.7% to $56,942.75, Ether rose 1.1% to $2,517.47, the yield on 10-year Treasuries advanced two basis points to 3.91%, Japan’s 10-year yield declined one basis point to 0.875% and Australia’s 10-year yield advanced seven basis points to 4.09%. In commodities, West Texas Intermediate crude rose 0.3% to $73.43 a barrel, Spot gold opens at $2395. On the data front we are very light with US consumer credit data the highlight and the BoC Summary of Deliberations.
