USDJPY Focus Intensifies
Radio silence out of Europe has kept investors in wait-and-see mode for yet another overnight session. However, interest in USDJPY is intensifying given the pair is hovering above key levels and US payrolls is just hours away. As far as economic data goes, the yen shows greatest sensitivity to the US employment situation, and a weak report later would likely give the yen another push higher. Extremely weak data might even be enough to trigger a round of intervention on Monday, and Japan Finance Minister Azumi’s comments overnight reinforce this view. He complained that the latest yen moves were “one-sided”, and said the price action was increasingly driven by speculation. This represents a moderate hardening of rhetoric – a step which typically precedes an act of intervention. Late in the European session, the euro did receive a healthy bounce on the back of comments coming out of Beijing. Speaking with visiting German Chancellor Merkel, Chinese Premier Wen Jiabao noted that China was considering ‘greater involvement’ in the EFSF and ESM stabilisation funds. However, he added that China was still ‘researching’ ways to participate, suggesting no imminent developments on this front. Dallas Fed President Fisher stuck to his hawkish views. He described the new Fed projections for the path of the policy rate as ‘pure guesses’, and said economic data is already on an upswing since those projections were made. We note that he lost his FOMC vote at the end of 2011 but is due to regain it in the Jan. 2014 rotation, along with two other hawks. Consensus opinion is looking for a +140k payrolls print (UBSe. +130k) and for the unemployment rate to remain stable at 8.5%. EURUSD traded 1.3115-1.3154 and USDJPY 76.12-76.26.
Click here to read the full report: UBS Morning Adviser Europe
UBS Investment Bank