Forex news for Asia trading Friday 15 September, 2017
- Heads up for BOE and ECB speakers in early Europe/UK time (and that's not all)
- Head of New Zealand’s Treasury Department says not concerned on Labour RBNZ plan
- ANZ says RBA Bias Index is pointing to 50bp of rate hikes in the first half of 2018
- South Korean President Moon says dialogue with North impossible at this point
- Another big day of US data coming up - industrial production, retail sales + more
- China state planner in inflation - expects a continued reasonable range
- Heads up for China data due today - credit creation
- North Korea says it'll take stronger self defense actions if US continues current course
- South Korean press: President moon warns on possible North Korea EMP threat
- PBOC sets USD/CNY reference rate for today at 6.5423 (vs. yesterday at 6.5465)
- Option expiries for Friday
- US Sec State Tillerson calls for all nations to take new measures against NK
- Extreme FX trading - go and live on Hokkaido (bear with me here)
- Report: UN Security Council to meet Friday over N.K. missile launch
- Is the Bank of Canada going it alone on rate hikes? CAD impact.
- JPMorgan asks: Are Cryptocurrencies a new asset class or a pyramid scheme?
- "Biggest barrier to further euro gains in near term is the speed of its gains so far"
- Japan data out earlier (ICYMI): Reuters Tankan
- NZ data out earlier (ICYMI): Manufacturing PMI for August: 57.9 (prior 55.4)
- Just past 8 am in Tokyo and a big session already (hello North Korea!) - update
- More on the North Korea missile test
- BOC's Wilkins: Inflation is at lower end of target ... but ... "we are forward looking"
- Reports on North Korea missile launch
- Barclays weigh in on where to for the yuan
- NZ data - House sales down, house prices up
- Trade ideas thread - Friday 15 September 2017
- More detail on Mnuchin's 'don't care about inflation' comment
- ICYMI: ForexLive Americas FX news wrap: CPI heats up Fed debate. Cable soars
- Brazilian president Temer faces new corruption charge
- More from Mnuchin: Concerned about economic growth, less concerned abut inflation
- Economic data due from Asia Friday
- US Treasury Sec Mnuchin says will release tax plan details week of September 25
There was plenty of yen action kicking off early in Asia today. It all started with a dip for USD/JPY on US Treasury Secretary Mnuchin saying:
"Although we respect the Fed's independence, we are concerned about economic growth. We're doing everything we can -- whether it's tax reform, whether it's regulatory relief, whether it's trade -- to create economic growth. And we're less concerned about inflation at the moment"
The key take aways from this are:
Although we respect the Fed's independence
- Yeah, that's b/s - saying this translates as we don't respect the Fed's independence
we're less concerned about inflation at the moment
- Coming after the higher than expected inflation reading, that is quite significant. Mnuchin's boss is a property developer and politician - he does not want higher interest rates. He is looking to replace Yellen with someone more ... malleable.
Anyway, yeah, USD/JPY took a dip from circa 110.50 to under 110.20 in a sharp fashion.
But ... wait ... there's more ...
An hour or so later North Korea launched a ballistic missile, and this one again overflew Japan (Hokkaido) to land in the Pacific Ocean. More:
USD/JPY dropped like a rock, to under 109.60 at one stage and then rose like a rocket itself, back toward 110 rapidly. It sat around the 00/10 into early Tokyo trade and then ticked back somewhat to circa 110.30 - its been pretty much 20/30 ever since.
Yen crosses lower alongside the lower USD/JPY and then these, too, bounced.
I should note that both Mnuchin's inflation comment and the North Korean missile test came at the thinnest liquidity time of the 24 hour forex day. Moves can be exacerbated by the thinness of trading at this time. If I were a US Treasury Secretary and ex-Goldman Sachs big swinger I'd likely be aware of how my comments could impact ... and if I was despotic head of a totalitarian state I'd likely be aware of how missile launches might impact too.
Maybe I just don't care in either case, or maybe there is something more to it ... I'm sure ForexLive traders can make up their own minds.
via GIPHY ... He said /launched what??? When???!!!
Taking a bit of a step back, the reaction from the yen was not as dramatic as it has been. There are factors at work against the yen right now:
- US tax reform seemingly on a better path
- US debt ceiling problems postponed
- Trump reconciling with senior Dems
- & therefore risk assets looking more attractive
I'm not calling an end to the 'yen as safe haven' meme (especially in the minutes following an event such as a missile launch or bomb test) but today's more limited (extent and time) yen gain in the wake of the missile firing is suggestive of it diminishing.
USD/CHF fell also (flows into the safe haven CHF), but its fully reversed its drop as I update (USD/JPY is pretty close to having done so also as I update).
EUR/USD has done little. Cable even less.
AUD/USD is net more or less unchanged on the session - it hasn't done much today - a very small range indeed. NZD/USD is a few tics higher but again not much in it.
We got comments in late US time/very early Asia from a Bank of Canada official (see bullets above) but USD/CAD has done little here also.
Gold benefitted from the missile launch but has pretty much retraced its gains also.
Still to come: