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JPY Firmer, But Pace of Run Higher Slows

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  • The aggressive short-covering rally in the JPY slowed on Friday, with the currency initially trading weaker against all others in G10 - but the effect was short-lived. The currency gradually picked up pace through the US crossover and is on course for another positive session against the USD, although yesterday's cycle extremes are seen in tact for now.
  • US PCE data came and with little long-lasting market consequence. PCE price indices were generally inline with expectations, although modest weakness was noted in the personal income category. A softer oil market worked against commodity and oil-tied currencies into the Friday close, as the 2.5% dip for WTI and Brent crude futures undermined the CAD and NOK ahead of the close.
  • CHF traded toward the lower-end of the G10 table. The currency had benefited for much of the week from the short squeeze across funding currencies - resulting in USD/CHF's break below 0.88 on Thursday. CHF failed to gain the same tailwind Friday, allowing markets to partially fade the recent rally and tilt CHF weaker.
  • Focus in the coming weeks shifts to central banks, with the Bank of Japan, Federal Reserve and Bank of England all set to decide in policy in three very live and critical policy decisions. Both the BoJ and BoE decisions see split consensus over whether the Bank hikes or cuts respectively, while the Fed are expected to signal for their first rate cut as soon as September.
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  • The aggressive short-covering rally in the JPY slowed on Friday, with the currency initially trading weaker against all others in G10 - but the effect was short-lived. The currency gradually picked up pace through the US crossover and is on course for another positive session against the USD, although yesterday's cycle extremes are seen in tact for now.
  • US PCE data came and with little long-lasting market consequence. PCE price indices were generally inline with expectations, although modest weakness was noted in the personal income category. A softer oil market worked against commodity and oil-tied currencies into the Friday close, as the 2.5% dip for WTI and Brent crude futures undermined the CAD and NOK ahead of the close.
  • CHF traded toward the lower-end of the G10 table. The currency had benefited for much of the week from the short squeeze across funding currencies - resulting in USD/CHF's break below 0.88 on Thursday. CHF failed to gain the same tailwind Friday, allowing markets to partially fade the recent rally and tilt CHF weaker.
  • Focus in the coming weeks shifts to central banks, with the Bank of Japan, Federal Reserve and Bank of England all set to decide in policy in three very live and critical policy decisions. Both the BoJ and BoE decisions see split consensus over whether the Bank hikes or cuts respectively, while the Fed are expected to signal for their first rate cut as soon as September.