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  • Writer's pictureMike Paterson

Yen demand bank in vogue

Thursday 7 December 2023

Markets still making their minds up on the Greenback and still firmly focussed on Central Bank rate cuts in 2024 as inflation eases but expectations rising again that the BOJ will act to tighten policy at next week's meeting and we've seen big demand again for the Yen helped by soe soggy risk sentiment. BOJ Governor Ueda mentioned exit from ultra-loose policy in a speech without actually suggesting it was happening any time soon and still expressing views that inflation will head below 2% but it was enough for these markets currently dancing on hot coals to over-react or produce a reality check on recent over-cooked moves the other way, depending on your view. Regular readers will know my thoughts.

Bank of Cananda left interest rates on hold expected albeit still cautious on inflation as I warned and not ruling out further hikes. US Fed next on the 13th, BOE, ECB and SNB 14th then BOJ wrapping things up on the 19th. The ongoing Middle East back-story sadly continues meanwhile and casts its own shadow over markets but still not driving prices. US NFPs lurking tomorrow and keenly awaited given the soggy jobs data so far this week.

Equities fell in NY and remaining on their lows in Asia/early European trading with the jury still out. WTI capped at $70.15 this time but holding $69.30 as the retreat resumed amid global demand concerns and still looking soggy overall albeit lifting a little to test $70.30 this morning. Gold trading tightly for the moment in $2025-35 as traders pause for thought after this week's heady times.

GBPUSD: Holding 1.2550 in the latest retreat amid some USD demand generally but capping into 1.2600 with rallies tempered by the GBPJPY selling. I remain poised for further rally sells when momentum fades.EURGBP: Support at 0.8560-65 being tested again after capping into 0.8577 this time. Jury still out but CB rate divergence in play for the moment and hence pressure on the Euro. GBPJPY: Capping at 185.50 then 184.50 this time amid the soggy risk tones and then accelerated move lower to 182.26 amid USDJPY tumbling and the JPY demand in general, which suits my core books as regular readers know. Sellers remain poised.

EURUSD: Support now around 1.0750-55 for the moment after capping at 1.0800 where I warned about the large option interest and retreating on the general EUR supply still. I remain a rally seller overall. USDJPY: Capping at 147.50 then 146.50 then 145.50 this time amid the JPY demand post-UEDA and now breaking down through 144.80 as I type. I remain a rally seller as preferred side overall at these still elevated levels. I hope the ongoing steer has served you well.

For more detailed analysis across a variety of pairs email

Interbank rates: 09.15 GMT

GBPUSD 1.2567

EURUSD 1.0775

EURGBP 0.8573

GBPEUR 1.1663

USDJPY 145.30

GBPJPY 182.60

GBPCAD 1.7069

GBPCHF 1.0995

GBPZAR 23.7043

GBPHKD 9.7842

USDCHF 0.8742

EURCHF 0.9420

EURHKD 8.3911

AUDUSD 0.6559

NZDUSD 0.6132

USDCAD 1.3597

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