From the Floor: USDJPY push repelled at 105.0
- USDJPY repelled at 105.0 after helicopter-money-talk dampener
- Rally in USDJPY so far "pretty modest" — Hardy
- UK housing index release for June to show some of the Brexit impact — Hardy
- Gold finds solid support and momentum still in place — Hansen
- Copper hitches ride on South China Sea row for two-month high — Hansen
- "Bumpy ride" for Tesla as valuations look extreme — Garnry
- Financial bonds lag in Europe could see opportunity if Italy crisis solved — Boye
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The speculation that Japan might be ready to unleash so-called helicopter money to the tune of
"The rise in USDJPY certainly has neutralised most of the post-Brexit reaction but the rally is pretty modest and it would need to get through 105.0 to really suggest momentum has changed", says John J Hardy, head of forex strategy at Saxo Bank. "Expect USDJPY to remain rangebound for some time".
USDJPY has pushed back towards 105.0 but needs a break beyond to confirm a change in sentiment
A sterling rally meanwhile, looks somewhat "suspicious" after a wave of buying that more or less mirrored the wave of selling that helped send it to 31-year lows last week, says Hardy. The rally may now have petered out just south of the 1.33 mark and Saxo's forex chief says that may have something to do with a consolidation of yen strength applying some breaks to the sterling rally.
"All the currencies like AUD and NZD that were doing well yesterday are weaker today after Suga's comments", he says.
Hardy is more focused on the key RICS UK housing survey which releases its findings for June this evening.
"It will be interesting to get a sense of how this very good indicator of the state of the UK housing market has been affected by Brexit even if only the last bit of the month covers the post-Brexit era", says Hardy. "There was already a massive deceleration in May".
The risk-on sentiment that dominated the earlier part of the week inevitably stymied gold's rise towards $1,400/oz, but there is good reason to believe that, having found support at $1,327/oz, the precious metal remains in "good health".
"Gold remains in good health as long as we stay above the $1,300/oz area", he says. "Trading is very technical at the moment having found support at the 38.2% retracement".
Gold was at $1,341/oz at 0655 GMT.
"Copper has jumped to 225, the highest since May", says Hansen. "There is actually a wall of supply of copper to come on to the market so this move up will be capped".
Gold needs to avoid a slide below $1,300/oz before we can talk about a serious correction
Tesla's 'bumpy ride'
Teslas's "bumpy ride" in 2016, as Saxo equities chief Peter Garnry coins it, could get worse.
"I actually think it can't be achieved given the order book and bearing in mind the acquisition of SolarCity too so we are now moving into negative territory in our view on Tesla".
The Italian banking crisis may not have gone away, but a general recovery in corporate bonds beyond the pre-Brexit levels is yet to be followed by financials and this could be a potential opportunity, says fixed income trader Michael Boye.
"XOVER dropped below the pre-Brexit line recovering all the losses since June 23", he says. "Financial bonds, especially in Europe, are still lagging and if we get a solution to the Italian banking crisis, there could be opportunity here".
helped swell copper to a two-month high. Photo: iStock