Article / 03 August 2016 at 7:01 GMT

Morning Markets: USDJPY looking to 100.0 again

Managing editor, / Saxo Bank



  • Eurozone: Retail Sales                                                  (0900 GMT)
  • US: ADP Employment Report                                       (1215 GMT)
  • US: ISM Non-Manufacturing Index                                (1400 GMT) 

USDJPY is once again within sight of the magical 100.0 figure after the market was left somewhat underwhelmed by the $274 billion stimulus package that lit a fire under yen but not, it seems, much else.

USDJPY hit a low of 100.68 Tuesday and was bunching menacingly in the 100.80/90 zone before the open in Europe for a further push lower after the stimulus decision helped the yen to rise some 1.5%. The export-led Nikkei took a pummelling and was down approximately 2% in the last hour with only the Shanghai Composite Index bucking the trend.

A cocktail of factors is once again gathering to twist sentiment negative including oil's increasingly unconvincing efforts to hang on to the lower foothills of the $40s/barrel area, China's latest data showing a decline in expansion in July and continued fallout from the Brexit vote in the UK.

Retail investors took some £3.5 billion out of UK managed Investment funds in June -  dramatically outstripping the £561 million global financial crisis peak of January 2008 - while construction PMIs for July suffered the sharpest downturn in seven years to slide to just 45.9, way below the 50.0 expansion/contraction dividing line.

Gold predictably is on the rise with base established above $1,360/oz and other safe-haven harbours can expect to see more demand as bulls depart the battleground.

Finally, there has been quite a kick in the teeth these last three days for digital currency Bitcoin which has fallen some 17%  after hackers had it away with some $65 million. Looks like it is back to the drawing board on the encryption....

Market signals

Asian session

  • NZ's quarterly Labour Cost Index showed jobs growing strongly but wages subdued
  • The ANZ commodity price index rose 2% month-on-month in July
  • Asia stocks extended their drop as oil’s selloff revived concerns over global growth
  • Crude halted losses below $40 a barrel before an update on US oil inventories
  • Malaysian ringgit and New Zealand’s currency slid at about 0.6% against USD
  • The MSCI Asia Pacific Index was down 1.3% at 0241 GMT
  • After a 5% fall in two session, WTI crude added 0.6% to $39.76/barrel
  • Gold for immediate delivery was little changed at $1,363.25/oz
  • The Nikkei had lost 1.54% at 0458 GMT 
  • The Hang Seng was down 1.69% at 0502 GMT, but in Shanghai shares rose 0.26%
  • In Mumbai, the Sensex was down 0.52% at 0501 GMT
  • The ASX/S&P 200 was at 5470, down 1.26% at 0528 GMT

Forex ahead

  • The JPY rose 0.3% to around 101.19 per USD at 0538 GMT before sliding later
  • The NZD retreated 0.6% to 71.97 US cents in mid Asia trading

From the Floor

Paling sun. "The focus continues to be disappointment around the Japanese stimulus package - it's only a matter of time before we break through 100.0 on USDJPY", says van-Petersen.

Banks' plunge. "We are seeing an extremely fragile European banking system", says Garnry.

Get all the latest from Saxo Bank's trading floors in From the Floor, within the hour.

In opinion

Freedom's price
The Economist has launched a scathing attack on the new populist nationalism threat to the globe, but is it right? Michael McKenna for one is not entirely toeing the line.


Today's retail sales update for the Eurozone is expected to show softer growth for June in line with the year-on-year trend, writes James Picerno.

Not so productive
US productivity data has been disappointing for several years and next Tuesday's data release will probably continue to tell a gloomy story, explains Stephen Pope.

JGB selloff
The Japanese bond yield is set to hit minus 0.5%, after the market was underwhelmed by the stimulus package launched yesterday, writes Max McKegg.


Be light on your toes around USDJPY. Photo: iStock

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