US major indices close marginally higherGoldman Sachs: Be careful with USD shorts, EUR/USD could head to 1.0950Barkin Q&A: ‘Last mile’ of inflation may still take longer than expectedUS crude oil futures settles at $70.10Ray Dalio: China policy makers need to do a lot more than what was announcedOPEC calls out the Wall Street JournalECB’s De Guindos: Services could be the main barrier to lower inflationECBs Schnabel: Return to 2% target in a timely manner is becoming more and more likelyPres. Biden: Does not support an attack on Iran’s nuclear sitesECB’s Centeno: Inflation has converged closely to ECB’s targetECBs Vasle: The ECB cannot exclude or commit to rate cut in October.Fed’s Barkin: 50 bps cut warranted as rates were out of sync with decline in inflationEuropean indices close today with mixed resultsEIA weekly crude oil inventories +3889K vs -1250K expectedSofter US auto sales highlight the pain from higher ratesIsrael plans ‘painful’ economic response to Iran strikes, could hit oil – reportKickstart the FX trading day w/a technical look at the EURUSD, USDJPY & GBPUSDQ3 Tesla deliveries 463K vs 462K expected. Shares dipADP September employment +143K vs +120K expectedForexlive European FX news wrap 2 OctThe AUD is the strongest and the JPY is the weakest as the NA session begins
The JPY moved sharply lower in trading today and is ending the day as the runaway weakest of the major currencies. The AUD, USD and CAD are the strongest.
The move lower in the JPY was largely driven earlier in the day by Japan’s Prime Minister Ishida’s comments that rate hikes are off the table. That shifted his recent bias (at least for now) for higher rates.
The move was further fueled by Bank of Japan (BoJ) Governor Ueda’s comments that markets “remain unstable”, implying that rate hikes aren’t likely anytime soon. Ueda had previously stated that the BoJ wouldn’t hike rates until markets stabilize, and Japan’s economy is recovering moderately, albeit with some weak signs.
Later in the US session, stronger ADP jobs data which showed September employment rising 143K vs 120K estimate. There was a revision to the prior month. The ADP has tended to be lower than the US NFP of late. That report will be released on Friday at 8:30 AM with the estimate of 144K (traders might be looking for something stronger now).
Additionally, Richmond Fed President Thomas Barkin stated that the recent 50 basis point rate cut was justified due to rates being out of sync with the declining inflation and an unemployment rate nearing sustainable levels. However, he emphasized that the Fed cannot yet declare victory over inflation. He expects little additional reduction in core PCE until next year and is closely monitoring how lower rates affect sectors like housing and auto sales to assess whether demand risks outpace supply. While the labor market remains steady with low hiring and firing, demand for workers may rise if economic demand increases. Barkin also pointed to inflation risks stemming from recent labor actions and geopolitical conflicts. He noted that the pace and extent of future rate cuts depend on how inflation and the broader economy evolve. Overall, although the Fed may look to “recalibrate” rates, the comments are not suggesting a race to lower levels.
Technically,, the USDJPY raced above 50% midpoint levels on the hourly chart (from mid-AUgustg high) at 144.48 and 50% midpoint level off the daily chart (range since January 2023) at 144.58. The price of the USDJPY is up testing the high price from last week (Firday) at 146.47 before it fell sharply down to 141.69 on Monday (the very next day). In the new trading day getting above the 146.47 level would open the door for further momentum toward a double top from September 2 and September 3 at 147.189.
Looking at the GBPJPY, it moved above the converged 100 and 200-hour moving averages near 191.96 earlier in the day, and then above its 200-day moving average of 192.82, and then a swing area between 193.33 and 193.48.
Unlike the USDJPY, it is still well short of the high price from last Friday near 195.895. That level also happens to correspond with the 100-day moving average (blue line at the top of the chart below).
Similar patterns can be seen in other JPY crosses with moves of 1.66% to 2.06% vs the major currencies today (jPY lower).
Looking at other markets today:
Crude oil is trading up $1.16 or 1.66% at $71.00Gold prices fell $-3.82 or -0.14% at $2659.30.Silver rose $0.42 or 1.36% at $31.83Bitcoin is lower at $60,786
In the US debt market, yields are higher:
2-year yield 3.645%, +2.4 basis points 5-year yield 3.555%, +3.4 basis points 10-year yield 3.784%, +4.2 basis points30-year yield 4.130%, +5.0 basis points
Looking at the US stock market:
Dow industrial average +39.55 points or +0.09% at 42196.52S&P index up 0.79 points or 0.01% at 5709.54.NASDAQ index up 14.76 points or 0.08% at 17925.12.
The small-cap Russell 2000 fell -2.02 points ro -0.09% at 2195.00.
In the European equity markets, the major indices close mixed:
German DAX, -0.33%France’s CAC +0.05%UK’s FTSE 100 +0.17%Spain’s Ibex -0.55%Italy’s FTSE MIB -0.28%
This article was written by Greg Michalowski at www.forexlive.com.
