Currency Reports

Bringing you a clear insight into, and analysis of, the movements and trends of EMEA currencies, the US Dollar, and the Japanese Yen from a dealer's perspective, brought to you by Mizuho Bank, Ltd.

Daily Currency Watch

Overnight comment in brief: 

18 March | Slow start to central bank week

  • Asian shares opened the week on the front foot, led by solid gains in Japan. Event risk in the coming week is high given the slew of central bank meetings but equities pushed ahead regardless. UST yields were flat in the Asian session as was the DXY index. Chinese data were mixed with industrial production better than expected but housing still under pressure.
  • Last week’s solid wage data have shifted the needle with regard to the BoJ meeting that concludes on Tuesday. The bulk of the press, including the usually reliable Nikkei, have suggested that policy change will happen this week. Bloomberg reports that 90% of BoJ watchers think the move will come this week. Given that expectations have risen so far, it seems hard for the BoJ not to move. If the BoJ is not going to move then the Bank has done a poor job of damping expectations. Not moving now would likely spur more volatility than moving. JGB yields moved lower across the curve and the Topix was up sharply. USD/JPY has moved a little higher through the Asian session and sits around 149.25 as Europe opens. Despite expectations of tighter policy this week, Japanese markets seem comfortable with the notion that policy will remain loose even after the first step on the route to the exit from the current ultra-loose policy settings.
  • Over the weekend De Cos noted that the first ECB cut could come in June, while Rehn said the ECB could probably take its foot off the brake in the summer. We would characterise both as leaning dovish rather than outright doves and their support for June means that June is highly likely. The outright doves do not have the support for an earlier move. EUR/USD was little changed during Asian trade to sit around 1.0895 as European trade gets underway. In the UK Rightmove house prices rose 1.5%MoM in March, up for a third consecutive month. Prices are now no longer declining on a YoY basis. Like EUR/USD, GBP/USD drifted sideways through Asian trade and sits around the 1.2735 level as Europe opens.

 

Read the full report - 18 March 2024

Find our monthly CEEC FX Outlook Reports, and earlier Daily Currency Reports, below.

 

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