Yen weakens as BoJ stays put

VIX gains

The volatility index is poised to post its biggest gains in six weeks. The index was at a two-week high on Friday, following the US Federal Reserve's (Fed) interest rate decision on Wednesday.

US and European indices fell for a second day, with the US 500 and Germany 40 hitting three-month lows.

JPY weakens amid BoJ decision

The yen weakened in the early hours of Friday after the Bank of Japan (BoJ) maintained its ultra-low interest rates. The key short-term interest rate target remained at -0.1% and for the 10-year bond yield around 0%. The BoJ also left unchanged its 50-basis point allowance set either side of the yield target.

There was no change in the BoJ’s forward guidance either, where some had expected a more neutral tone. In its statement, the BoJ reiterated that if needed, it would "take additional easing measures without hesitation". Japan's finance minister Shunichi Suzuki said this morning that he is watching currencies closely, and with a high sense of urgency. At ¥148, the yen is well in intervention territory. The Japanese government intervened in September 2022 when the yen hit ¥145, and a second time when USD/JPY rose to ¥151.

Before the BoJ decision, the latest inflation data was released in Japan, data that remained broadly unchanged in August. Only headline CPI growth slowed to 3.2% year-on-year (YoY), from 3.3% the previous month. Core CPI, which excludes food prices, remained at 3.1%. Ex-food and energy, the measure favoured by the Bank of England (BoE), CPI growth remained at 4.3%.

GfK consumer confidence

In the UK, Gfk consumer confidence rose for a second straight month. The index to -21 in September, the highest since January last year, from -25 in August. Economists polled by Reuters had forecast a fall to -27. It however remains well below its average of -10 for the survey, which has been running since 1974.

Throughout Friday morning, manufacturing and services PMI data will be released in the eurozone and the UK, and later this afternoon in the US. Not much change is expected. European and UK indicators are all expected to remain below 50 in contraction territory. Only US services PMI is anticipated at 50.6 for September.

Equities

On the equity markets, investors and traders will be closely watching Ocado. The stock dropped to a three-month low, losing 20% of its value. This followed a recommendation downgrade by Exane BNP. The online supermarket was cut to underperform from neutral, with Exane BNP citing concerns over subdued growth in Ocado's retail business.

While 20% seems a lot for a downgrade, Ocado shares are still up 80% since early June. Between early June and end of July alone, the stock jumped nearly 200%.

Rupert Murdoch has stepped down as the chairman of Fox and News Corp - and his eldest son Lachlan Murdoch is taking over the reigns. The 92-year old informed colleagues in a letter on Thursday of his decision, noting he was in good health. He will officially make the transition in November, and his son Lachlan will become the sole chairman of both companies.

US Energy giant Chevron and unions have struck a deal to end strikes at two large liquefied natural gas (LNG) facilities in Australia. Workers have accepted a proposed agreement put forward by the country's labour regulator, the Offshore Alliance. The industrial action had been taking place at the Gorgon and Wheatstone facilities over pay and conditions since 8 September.