– Pro-risk status quo remains; BoJ attempts to calm JGB market
The market has continued to remain calm and EURUSD well supported despite mixed Italian auction results (3Y strong, 15Y less so), but the pair could see further upside to 1.3200 in synch with the current levels of peripheral spreads. Barring an initial 50-pip sell-off to near 1.0500 on a much weaker employment report, AUDUSD rallied sharply to a fresh 1.0582 high once the European session got under way. Meanwhile, the JGB market is a little calmer (5Y under 0.20% vs. 0.26% yesterday) after the BoJ said it will respond flexibly to market volatility having met with market participants. The BoJ will be conducting its second and third JGB buying instalments together on Friday. There is little on the data calendar today to disrupt current trends; Fed Plosser and Bullard give speeches, while initial jobless claims are expected to show some improvement (370K vs. 385K prior).
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BNP Paribas