A lack of major economic releases yesterday meant for a slow day of trading but overnight the Yen has seen a little action as USDJPY hits a three week high just pushing up against the 102.00 level. A surprise rise in unemployment to 3.7% and weaker retails sales in Japan gave traders an excuse to sell the Yen as they perceive the chances of further QE having increased, despite words form BOJ board member Koji Ishida giving away little in a speech overnight.
Things should warm up a little from today onwards as we have a speech from the UK’s MPC member Ben Broadbent this morning, now the deputy governor for monetary policy and seen as one of the more hawkish voting members and then consumer confidence data from the US later this afternoon. This is likely to be a market mover as it’s one of the key metrics the Federal Reserve watch since the US economy is so heavily reliant on the consumer.
The emphasis remains on the dollar and whether it can add to the gains it has made so far this month hovering around six week highs. Against sterling and the euro, the dollar has made good ground in recent weeks with cable remaining below the 1.7000 level and EURUSD seemingly anchored to just above 1.3400. Despite diverging central banks, in respect of the BOE and Federal Reserve, some of the UK data has softened leading to a protracted bout of profit taking in GBPUSD, which is susceptible to seeing further downside especially if this afternoon’s US consumer confidence, which is expected to rise from 85.2 to 85.3, comes in higher.