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FOREX: JPY Falters as Rengo Tally Falls Short of Survey

FOREX
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  • Rengo pay tallies have again proved market moving - while unions are set to demand a faster pace of pay rises this year (5.46% from 5.28%), the final demand may turn out lower than many surveys had estimated - undermining the JPY and helping aide USD/JPY toward the mid-week high of 149.19.
  • UK economic data out this morning surprised to the downside, with GDP surprisingly contracting in January while industrial and manufacturing production data came in well below forecast. GBP is softer as a result, with sell-side marginally marking lower growth expectations for this year - meaning possible implications for the BoE's policy profile. GBP/USD's returned closer to the $1.2900 handle as a result, with 1.2914 marking first support before the psychological level.
  • Antipodean currencies are undergoing a minor relief rally, helping tip AUD, NZD to the top end of the G10 table - although both AUD/USD and NZD/USD remain largely rangebound on the week. AUD/USD still sees S/T support at the 50-dma of 0.6274.
  • Preliminary Uni of Michigan sentiment data marks the data highlight Friday, with markets likely to keep a close eye on the inflation expectations component - it's this figure that surprised materially to the upside last month, triggering market concern over stagflationary forces in the US economy. Consensus looks for the 1yr expectation to hold at 4.3% this month, with the longer-term expectation moderating to 3.4%.
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  • Rengo pay tallies have again proved market moving - while unions are set to demand a faster pace of pay rises this year (5.46% from 5.28%), the final demand may turn out lower than many surveys had estimated - undermining the JPY and helping aide USD/JPY toward the mid-week high of 149.19.
  • UK economic data out this morning surprised to the downside, with GDP surprisingly contracting in January while industrial and manufacturing production data came in well below forecast. GBP is softer as a result, with sell-side marginally marking lower growth expectations for this year - meaning possible implications for the BoE's policy profile. GBP/USD's returned closer to the $1.2900 handle as a result, with 1.2914 marking first support before the psychological level.
  • Antipodean currencies are undergoing a minor relief rally, helping tip AUD, NZD to the top end of the G10 table - although both AUD/USD and NZD/USD remain largely rangebound on the week. AUD/USD still sees S/T support at the 50-dma of 0.6274.
  • Preliminary Uni of Michigan sentiment data marks the data highlight Friday, with markets likely to keep a close eye on the inflation expectations component - it's this figure that surprised materially to the upside last month, triggering market concern over stagflationary forces in the US economy. Consensus looks for the 1yr expectation to hold at 4.3% this month, with the longer-term expectation moderating to 3.4%.