Early Morning Call: JPY rally continues as YCC speculation mounts
USD continues to strike new lower lows, USD/JPY closing in on 126.36 May 2022 support, while USD/CNH is at a new six-month low.
Equity market overview
Ther is no real direction in equity markets in Europe this morning, after a mixed session in the APAC region overnight.
US equity and bond markets will be closed today to celebrate Martin Luther King Day.
In Japan, producer price index (PPI) rose at a faster-than-expected pace in December - a 10.2% increase year-on-year (YoY) - following a 9.7% increase the previous month, and higher than the median market forecast for a 9.5% gain. This is another confirmation of the recent growing signs of inflationary pressure that could force the central bank to raise interest rates soon.
Currencies
The yen's rally continues this morning, following a strong week of gains. Over the past few days, speculation around potential further policy tweaks has been mounting. The Bank of Japan (BoJ) surprised the markets about a month ago with its decision to widen the band around its 10-year yield target to 0.5% from previous 0.25%.
Last Friday, the Bank of Japan had to step in with a record amount of bond-buying operations after the benchmark 10-year bond yield cap climbed as high as 0.54%.
The US dollar is down this morning, not only against the yen, but also against all major currencies. Cable trades at a one-month high, EUR/USD is back near the nine-month high set at the end of last week, and the Australian dollar rose for a few hours overnight above the psychologically important level of 70 cents against the greenback.
The recent dollar weakness also benefits gold. The precious metal is now trading comfortably above $1,900, having reached $1,929 earlier this morning, a near nine-month high.
UK retail
It's been a surprisingly good Christmas, on the whole, for the UK retail sector according to the reports we've seen thus far.
Some tading statements to be published this week, starting on Tuesday with Ocado. Marks & Spencer said that it was taking 30% of Ocado’s Christmas spending online.
On Wednesday: WHSmith, Currys, Burberry Group, Just Eat Takeaway.com, and Thursday: Deliveroo, Dunelm and Boohoo.
According to the Times, Marks & Spencer plans to open 20 new stores, which would lead to the creation of 3,400 jobs in the UK. The newspaper says the retailer will open eight "full-line" stores and 12 food halls.
Earnings season
US earnings season officially started last Friday with reports from four of the six main US banks.
US earnings publications will resume tomorrow with Goldman Sachs, Morgan Stanley, and United Airlines.
On Wednesday sees Alcoa reporting, followed on Thursday by Procter & Gamble and Netflix.
Commodities
Oil prices consolidated this morning after the gains recorded during the second half of last week.
Last week, the Baker Hughes total rig count rose by three to 775. The number of oil rigs in operation increased by five to 623.
There is also a pause on the industrial metals market: copper, zinc, and aluminium are trading lower this morning, after last week's strong gains.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
Start trading forex today
Find opportunity on the world’s most-traded – and most-volatile – financial market.
- Trade spreads from just 0.6 points on EUR/USD
- Analyse with clear, fast charts
- Speculate wherever you are with our intuitive mobile apps
See an FX opportunity?
Try a risk-free trade in your demo account, and see whether you’re onto something.
- Log in to your demo
- Take your position
- See whether your hunch pays off
See an FX opportunity?
Don’t miss your chance – upgrade to a live account to take advantage.
- Get spreads from just 0.6 points on popular pairs
- Analyse and deal seamlessly on fast, intuitive charts
- See and react to breaking news in-platform
See an FX opportunity?
Don’t miss your chance. Log in to take your position.
Live prices on most popular markets
- Equities
- Indices
- Forex
- Commodities
Prices above are subject to our website terms and agreements. Prices are indicative only. All share prices are delayed by at least 15 minutes.
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
