Forex Forecast

BoJ Meeting Expectations Rise After a quiet Asia session, USDJPY caught a bid in Europe after Reuters cited ‘sources’ saying the BoJ may extend the maturity of Japan government bonds it buys under its asset-buying scheme to three years (from two years currently).

AUD Buckles After Soft CPI The Australian dollar suffered after Australia’s Q1 CPI inflation report came in much weaker than expected. Headline inflation fell sharply to +1.6% y/y (cons. 2.2%, prev. 3.1%). Market expectations had already been lowered by yesterday’s PPI report, but the scale of the miss was still surprising, and AUD promptly dropped […]

Risk Woes Remain Risk appetite has started the week on a negative note as politics across the Eurozone begin to cloud the adjustment process. Firstly, the IMF did manage to announce a ‘firepower’ boost of over $430bn but the contingency nature of many of the countries’ contributions means that actual deployment when called upon remains […]

Political And Economic Risks In Europe The euro came under modest selling pressure in the European session, through a combination of heightened political risk and weak economic data. The flash PMIs in the Eurozone were generally soft. The composite indicator came in at 46.0 vs consensus of 48.0 in April, the lowest since June 2009.

RBA Poised To Cut The Australian dollar fell sharply overnight after Australian Q1 PPI inflation came in well below consensus. Our Australian economics team reacted by lowering their forecast for tomorrow’s headline CPI reading.

Policy Meetings In Focus Over the weekend the IMF received pledges of “over $430 bn” from IMF member countries in a bid to bolster its crisisfighting resources. Although the G20 statement made it clear that the additional funds will not be ear-marked for any particular region, the intention is to have enough resources on standby […]

Positive Data Surprises Both the pound and the euro gained ground in the European session after positive data surprises from both regions. The euro rallied after the German IFO business climate index rose to the highest IFO since August 2011.

USDJPY Consolidates USDJPY consolidated overnight as next week’s FOMC and BoJ policy meetings draw ever nearer. Our US economists are not concerned by the higher than expected initial jobless claims announced yesterday.

USDJPY Holding Firm USDJPY extended its gains overnight and continues to look well supported even in the face of the rather soggy belowconsensus US data (initial jobless claims at 386k; March existing home sales down to a 4.48 mn annual rate; April Philly Fed manufacturing index down to 8.5) and declines in US equities, helped […]

USDJPY Rise Continues The much anticipated Spanish auctions were largely uneventful. The treasury managed to sell EUR1.2 bn of the 2014’s and EUR1.42bn of the 2022’s – at the upper end of targets. The bid-to-covers were also reasonable at 2.42x on the 10 year bond.

BoJ Drops Another Hint Trading was subdued in Asia overnight given a light economic data calendar, but investor attention is noticeably turning to what next week’s two policy meetings will bring. The FOMC and the BoJ policy decisions are likely to set the tone for USDJPY for months to come, and USDJPY is already creeping […]