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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
CROSS ASSET
In some respects early September trends are looking similar to early August trends from a broader global macro standpoint. Global equity sentiment is weaker, commodity prices are under pressure and JPY is outperforming in the FX space. There are lots of moving parts to the outlook, but to some degree BOJ rhetoric has been a common theme to both these episodes.
- The chart below plots intra day moves of USD/JPY versus US equity futures going back to late July. USD/JPY peaked before Eminis did, as BoJ Governor Ueda delivered a hawkish rate hike at the end of July. Yesterday, USD/JPY starting moving lower, which arguably came ahead of the Emini move. Part of the JPY gains likely reflected Ueda rhetoric, who reiterated on Tuesday that the central bank will continue to raise interest rates if the economy and prices perform as expected.
- Of course, other factors have also been in play, with the weaker headline ISM print raising recession fears overnight, while slumping oil prices after another red flag for the global growth outlook.
- Sentiment is likely to be further tested with US NFP printing this Friday. The weak print in early August was another catalyst for the global risk off move. We also recognise there has been a meaningful positioning adjustment since late July.
- BoJ rhetoric can also shift quickly. We had a speech from BoJ Deputy Governor Uchida on August 7, which helped calm market sentiment, as the BoJ official stated rates wouldn't rise if markets were unstable.
- Note tomorrow we have a speech from BoJ board member Takata in Ishikawa. The BoJ outlook, particularly in light of fresh market volatility, could again be in focus.
Fig 1: USD/JPY Has Arguably Led Recent Sharp US Equity Risk Off Moves
Source: MNI - Market News/Bloomberg
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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