Bank of Japan rate hike speculation fueled big moves in Japanese Government Bonds and the Japanese Yen this morning, the Nikkei Dow also fell 1.8% through the turmoil. Japan’s 10-year government bond yield surged above 0.75%, rebounding sharply from over three-month lows. The yen appreciated from about 147.3 to 144.7 USDJPY for a 1¾% gain. JGBs bear steepened with the 2s yield up about 4bps and 10s climbing 11bps. Bank of Japan Governor Kazuo Ueda before Parliament testified ambiguous guidance … Continue reading “Yen Rallies After Japan’s 10-year Government Bond Yield Surges on BOJ’s Ueda Comments”
Moody’s Lowers Outlook on US Debt to Negative, Towards Fitch and S&P Global Downgrades
Rating agency Moody’s lowered its outlook on the US credit rating to “negative” from “stable”, pointing to a sharp rise in debt servicing costs with higher interest rates and “entrenched political polarization”. The move came after US markets had closed for the weekend. The move followed Fitch and S&P downgraded the US. The credit ratings agency maintained the USA’s top Aaa rating but changed its outlook to ‘negative’. Moody’s is the only of the three big credit rating agencies that … Continue reading “Moody’s Lowers Outlook on US Debt to Negative, Towards Fitch and S&P Global Downgrades”
Yen Falls After Bank of Japan Changes Language Around 1% 10yr JGB Cap BUT No 1.5% Extension
The Bank of Japan as widely expected kept unchanged its -0.1% target for short-term interest rates, and 0% for the 10-year government bond yield unanimously. The BOJ did not extend the cap to 1.5% as speculated earlier but instead formalized the 1% cap. Previously the BoJ adjusted the settings by shifting the hard ceiling from 0.50% to 1.00% in the yield curve control band of +/- 0.50%. The yen weakened, move higher for yen crosses. The yen fell to fresh … Continue reading “Yen Falls After Bank of Japan Changes Language Around 1% 10yr JGB Cap BUT No 1.5% Extension”
Yen Falls Further After Bank of Japan No Change to Monetary Policy or Forward Guidance
The Bank of Japan as widely expected kept unchanged its -0.1% target for short-term interest rates, and 0% for the 10-year government bond yield unanimously. Previously the BoJ adjusted the settings by shifting the hard ceiling from 0.50% to 1.00% in the yield curve control band of +/- 0.50%. The yen weakened, move higher for yen crosses. USD/JPY moved to fresh highs of 148.38 after Governor Ueda press conference where he said “I said that we need to patiently continue … Continue reading “Yen Falls Further After Bank of Japan No Change to Monetary Policy or Forward Guidance”
Forex Traders Weekly Outlook – The Aussie Bounces with Oil, Copper and Iron Ore
The Australian Dollar was the best performer of the week, buoyed by improving sentiment in commodities, iron ore hit a five-week high and oil prices YTD highs with hopes for a Chinese economy rebound. The New Zealand Dollar pulled along with it. The US dollar rally was tested this week and ultimately again benefiting from safe haven and yield chasing flows proved its resilience after rebuffing earlier selling. The Dollar Index bounced off 102.84 to close the week at 104.23. … Continue reading “Forex Traders Weekly Outlook – The Aussie Bounces with Oil, Copper and Iron Ore”
Forex Traders Weekly Outlook – US Dollar and Swiss Franc Attracting Safe Haven Flows
The US dollar rally continued again this week benefiting from safe haven and yield chasing flows. 10-year Treasury yields underpinning yen pairs with carry trade impact. Fed Chair Jerome Powell’s remarks at Jackson Hole renewed commitment to combating inflation prompted traders to elevate their expectations for another rate hike within the year. The yen fell to ¥146.6 per dollar after Jay Powell’s speech at one point. That was the lowest level against the dollar since November on Friday, pressuring the … Continue reading “Forex Traders Weekly Outlook – US Dollar and Swiss Franc Attracting Safe Haven Flows”
Forex Traders Weekly Outlook – Weak China Pressures Yen & Commodity Currencies Further
The US dollar rally continued again this week benefiting from safe haven and yield chasing flows. 10-year Treasury yields underpinning yen pairs with carry trade impact. The move higher in US yields again sees “risk off” extended to the emerging markets. EM currencies again under pressure with global risk aversion. We see the folly of BRICs and BRIC wannabes as the Turkish Lira hits another all-time low and the imploding Chinese recovery impacts the Yuan. The only currency the US … Continue reading “Forex Traders Weekly Outlook – Weak China Pressures Yen & Commodity Currencies Further”
Forex Traders Weekly Outlook – Higher Yields Pressure Yen & Emerging Currencies
The US dollar rallied, benefiting from safe haven and yield chasing flows. Treasury yields finished near the highs of Friday and not far from last week’s highs as curve steepeners continued on hopes for a soft landing with PPI slightly higher but CPI lower than forecasts. The move higher in US yields again sees “risk off” extended to the emerging markets. EM currencies quickly under pressure with global risk aversion. We see the folly of BRICs and BRIC wannabes as … Continue reading “Forex Traders Weekly Outlook – Higher Yields Pressure Yen & Emerging Currencies”
Forex Traders Weekly Outlook – Rating Change Crossfire Hit Emerging Markets Hardest
Many catalysts for the foreign exchange markets with the Bank of England, Reserve Bank of Australia and Bank of Japan JGB moves and the larger than expected US treasury funding program. Throw into the mix rating agency Fitch downgraded the United States of America’s Long-Term Foreign-Currency Issuer Default Rating (IDR) to ‘AA+’ from ‘AAA’ on Tuesday. Following the increased funding needs and Firch downgrade the move higher in US yields saw “risk off” extended to the emerging markets. EM currencies … Continue reading “Forex Traders Weekly Outlook – Rating Change Crossfire Hit Emerging Markets Hardest”
Fitch Downgrades United States Long-Term Ratings to ‘AA+’ from ‘AAA’, Outlook Stable
Rating agency Fitch downgraded the United States of America’s Long-Term Foreign-Currency Issuer Default Rating (IDR) to ‘AA+’ from ‘AAA’ on Tuesday. The Rating Watch Negative was removed, and a Stable Outlook assigned. The Country Ceiling has been affirmed at ‘AAA’. Fitch had warned debt limit games, political brinksmanship and reduced financing flexibility would impacts United States of America at ‘AAA’. Key Rating Drivers Ratings Downgrade: The rating downgrade of the United States reflects the expected fiscal deterioration over the next … Continue reading “Fitch Downgrades United States Long-Term Ratings to ‘AA+’ from ‘AAA’, Outlook Stable”