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FX Update:.

FX Update: A burst of risk-on positioning sent global stocks higher and saw the both the dollar and yen turn lower after seeing fresh highs against the other main currencies during pre-European trading in Asia. China's commerce ministry flicked the risk appetite switch back to "on" by stating that the U.S and China have agreed in principle "cancel additional tariffs in different phases." USD-JPY bounced from a two-day low at 108.64 to a high of 109.19. AUD-JPY and other yen crosses saw similar price actions. EUR-USD rallied back to the 1.1080-90 area after making a three-week low at 1.1055. EUR-JPY also jumped from a three-week low, at 120.14, to levels above 120.60. In data, German industrial production missed expectations at -0.6% m/m in September, reaffirming the recessionary picture in the sector and one of an overall sputtering Eurozone economy (analysts remain bearish of EUR-USD). In Japan, BoJ Governor Kuroda said that the central bank will remain committed to monetary easing to achieve its 2% inflation target, though he admitted "it's taking time" (there is a theory that QE, or QQE with yield curve control in Japan's case, is backfiring in the sense that it fosters excess capacity, thereby generating deflationary forces). Elsewhere, the pound remained in a net directionless mode ahead of the upcoming BoE policy decision, where no change is widely expected, though there might be one or two dovish dissenters in the ranks of the nine member policy committee. USD-CAD edged out an eight-day high at 1.3197 before dropping back to the mid 1.3100s.

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Publication:The Fly
Date:Nov 7, 2019
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