The
US dollar lost further ground during the Asian session following on
from the bombshell pivot from the Federal Open Market Committee
(FOMC) and Federal Reserve Chair Powell on Wednesday.
EUR,
AUD, NZD, GBP, CHF, CAD; all gained further ground vs. the big
dollar.
But
the star of the show was JPY. Exiting US trade it was just below
143.00, and quickly dropped towards 142.00 with only New Zealand and
Australian markets active. This is an especially thin liquidity time
of the 24-hour forex cycle and is often a venue for over-extended
capitulation moves. Not today, though. After a brief respite when
USD/JPY rose back near 143 Tokyo, Singapore and Hong Kong all weighed
in, sending the pair briefly under 141.00 as the session progressed.
All yen crosses followed a similar pattern, all have been smashed
lower on the day. helping it lose ground today was the media report speculating that a BOJ pivot could come as early as January , (see the “Is the Bank of Japan planning to exit negative rates sooner than expected?” post above).
Markets
are, of course, eyeing the convergence of Japanese vs. elsewhere
monetary policies as Japan readies to unwind its super-easy policy
while other DM central banks prepare to ease back from their
tightening. There is much yen-carry trade to undo. As for timing,
that is uncertain but, today at least, markets were happy to get in
early.
While
the follow-through from the FOMC was the focus, a few items from the region shifted around rates.
- New
Zealand Q3 GDP was a shocker, a huge miss on estimates and an
economic contraction. NZD/USD was marked down on the data. It spent
some time languishing around 0.6175 before rallying back to rise
above 0.6230. - From
Australia we had the November employment report. This showed a huge
beat in jobs added, up over 61K vs. +11K expected, but a miss on the
unemployment rate, 3.9% vs. 3.8% expected. The participation rate was
higher, a record high as it happens. There is more in the posts
above, including RBA implications. The TL;DR on this, IMO, is that
the February (5th
and 6th)
meeting remains live pending the quarterly CPI report due on January
31. AUD/USD climbed higher, briefly to 0.6725 and its not a lot down
from there as I post.
Still
ahead for Thursday are the policy decisions from the Swiss National
Bank, Bank of England, and European Central Bank. The fun has
barely begun!
- This snapshot from the ForexLive economic data calendar, access it here.
- The times in the left-most column are GMT.
- The numbers in the right-most column are the ‘prior’ (previous month/quarter as the case may be) result. The number in the column next to that, where there is a number, is the consensus median expected.