2019-11-11 • Updated
USD/JPY edged higher in the Asian session as the Bank of Japan’s officials have recently said they will start buying unlimited amount of bonds to return the yield back to their zero target. JGB yields were on the, with the 100 year spiking above 0.105%. The pair rose above 113.65 on the announcement.
The euro spiked above 1.1425 (o.4% higher) overnight as the ECB minutes indicated that the ECB was on the edge of announcing a taper of its asset purchase program in the near future. The bank will hold its meeting on July 20 next time. ECB’s determinacy to remove its policy accommodation will be push the euro higher. The technical outlook for EUR/USD is neutral. A break of the resistance at 1.1445 will be an indication of the EUR moving into a bullish phase.
The British pound also gained some points in the past few sessions. It rose above 1.2970 as the Bank of England’s McCaffery (a dissenter at the last MPC meeting) said that the policy accommodation might be removed in the near-term future. Mostly likely, GBP/USD will trade sideways within the range of 1.2890 – 1.3030 in the upcoming sessions. And only clear break of the upper border of the range will indicate that the euro has moved into a bullish phase. The odds for such move do not appear to be high at the present moment, but they might increase if we get upbeat UK manufacturing production figures and passable goods trade balance figures.
Kiwi suffered some losses overnight sliding to 0.7240. We got plenty of US data yesterday. ADP Payrolls were 158K against expected 188K. It could signal downside risks for today’s non-farm payrolls. A stronger than expected non-manufacturing ISM from the US remedied USD losses though. At the present moment, NZD/USD trades at 0.7275. There is a scope for extension of kiwi’s gains to 0.7530. But we wouldn’t rush into longs at this point. The overall outlook for NZD/USD is still neutral.
US dollar/Loonie traded higher in Tokyo morning to 1.2990. Crude oil prices declined after a sharp but short-lived boost from a big decline in the US stockpiles faded. Canadian data coming at 3:30 pm will garner a special focus on the back of the next week Bank of Canada’s monetary policy meeting (at which a rate hike is expected). The major internal focus will on the US labor market report though. The market is currently expecting a payrolls growth of 178K and unchanged unemployment rate. Most analysts believe that NFP above 118K would still be enough for the Fed to continue the normalization of its monetary policy.
Other events that is coming up: a Fed monetary policy report is about to be presented to Congress ahead of Yellen’s testimony next week; the G-20 summit in Hamburg with the US President Donald Trump and his Russian homologue Vladimir Putin meeting to be held on its sidelines. Meanwhile, the investigations intro Trump’s presidential campaign collusion with Russia continues. It will be interesting to know whether Trump takes a hard line against Kremlin in the future or not.
Brent crude futures is maintaining stability this Friday, with traders awaiting an OPEC+ meeting that might lead to further supply cuts. Brent crude was down 8 cents at $81.34 a barrel, following a 0.7% drop in the previous session.
The past several weeks have been a real triumph for the bulls in the oil market. The Brent spot price grew by 8.5% during the last month.
China has issued new oil product export quotas to allow oil companies to send surplus barrels overseas, particularly Sinopec, which has the highest volume among quota holders. While the exact quota volume remains undisclosed, oil companies are forecasted to export approximately 3.5 million metric tons of clean oil products in September, a 10% increase from August.
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As the US Non-Farm Payrolls (NFP) take center stage, this month's data gains special attention, particularly after the unemployment rate took a concerning turn in the previous month. The US ADP Employment Change reveals a significant decline, with the economy adding 298K new jobs...
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