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Japanese Yen Boosted As Equities Plunge, EURCHF Sharply Lower

FOREX
  • Weakness across major equity benchmarks placed the Japanese Yen as the best performing major currency on Wednesday. With risk-off flows also prompting a small recovery for the US dollar, it was cross/JPY that felt the brunt of the moves.
  • GBPJPY sticks out after dropping around 2.1% which has a small miss in UK April inflation contributing to the weakness. The pair is closely followed by the likes of AUDJPY and NZDJPY, also dropping around 1.75% amid the 3.5% declines in e-mini S&P 500 futures.
  • There was a very strong move lower in EURCHF throughout the US session. Natural risk off moves contributed, however, relative diverging central bank headlines prompted an acceleration to the downside.
  • The Swiss franc has been bolstered by Swiss National Bank President, Thomas Jordan, saying it is ready to act if inflation pressures continue.
  • “Uncertainty requires vigilance” and “the SNB will take care to maintain price stability,” he said at an event in Baden, northwest of Zurich. “We see the risk of second-round effects.”
  • On the contrary, ECB rate hike pricing has pulled back sharply on the back of MNI's Policy piece which in part cites ECB sources downplaying Dutch central bank chief Knot's call for a possible 50bp hike, weighing on the single currency.
  • EUR/CHF fell from levels just shy of 1.0500 all the way to 1.0332, the lowest level in two weeks. Firm support does not come into play until 1.0190.
  • Aussie employment data highlights the APAC session on Thursday ahead of the Annual Budget release from New Zealand. The latest ECB Monetary Policy Meeting Accounts are then due before US Philly Fed and Existing Home Sales figures.
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