Steen Jakobsen
The Bank of Japan has abandoned quantitative easing and the European Central Bank may taper its bond-buying programme, so what is the role of central banks in 2017, asks Saxo Bank’s chief economist Steen Jakobsen.
Article / 16 August 2016 at 7:00 GMT

Morning Markets: USDJPY testing the lower limits

Editor / Saxo Bank

Morning Markets: Prices


  • Germany: ZEW Economic Survey (0900 GMT) 
  • US: Housing Starts (1230 GMT)
  • US: Industrial Production (1315 GMT) 

The Japanese yen was stronger overnight, with USDJPY tumbling through resistance around the 100.75 area and approaching the big, 100 handle.

One element assisting the safe-haven rally is the lowering of Federal Reserve rate hike chances, whose probability has now dropped below 50% for 2016 according to forecasts.

Sterling is also trending lower after rallying somewhat in the New York session; although the pair remains significantly oversold, the "near-inevitable" short squeeze does not look likely in the next minuted and hours.

Crude prices remain near their three-week highs with the prime directional factors remaining verbal intervention from Russia and Opec, as well as short-covering from the previous rally.

Today's celendar sees German ZEW data front and centre as analysts expect a mixed August report. Later in the day, we have US housing starts and industrial production where a significant beat or shortfall is likely to add new direction to the greenback trade.

Market signals

Asian session

  • Australia's consumer confidence rebounded from last week’s dip, rising 2.5%
  • RBA expects inflation to remain low but growth prospects are good
  • Morgan Stanley forecasts iron ore at $40/tonne in second half of 2016
  • Brent was at $48.14/b, down 21 cents and WTI at $45.56/b, down 18 cents
  • Emerging market stocks and currencies extended gains in Asian trading
  • South Korean shares resumed trading after a holiday, climbing for an eighth day

Forex ahead

  • USDJPY plunges to 100.25 area as yen rally continues
  • The GBP slips to near its three-decade low in early trade, at $1.2887
  • The South Korean won led a measure of currencies higher
  •  A gauge of swings in the yuan dropped to near its lowest level since October
  • CNH one-month implied volatility dropped to 3.64%
  • The AUD was trading in a tight range around 76.7 US cents in mid Asia trade

From the Floor

USDJPY slide. “I think the 100.0 mark is very likely to be tested”, says Moltke-Leth

Opportunity knocks.Intraday sellers of WTI could be looking for a retracement back to $43-44/barrel”, says Hansen.

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

In opinion

Germany's ZEW release of August sentiment is expected to produce a mixed report today although the consensus is for a rebound, says James Picerno.

Oil boost

Asia's markets just love when the oil price stabilises - it's a cue to confidence and this morning's markets were no exception, says Saxo's Singapore team

Emerging power

Emerging market stocks advanced for an eighth straight day as Russian shares rallied to a record high. As the USD slides, so the EMs rise, says Saxo Capital Markets  

Off the boil

The USD managed a recovery rally after Friday's poor data, but bulls have apparently run out of gas as the greenback is sliding lower again, writes John J Hardy.

Tokyo Tower

Bright lights, big rally: The JPY has emerged from the tentative Friday dollar rally 
a winner as USDJPY heads toward the big, 100.00 handle. Photo: iStock

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