Written by Steven Dooley, Head of Market Insights, and Shier Lee Lim, Lead FX and Macro Strategist
Greenback higher on Ishiba comments
The US dollar was stronger across Asia on Wednesday after new Japanese prime minister Shigeru Ishiba said the Japanese economy wasn’t “ready” for another rate hike.
The Bank of Japan has raised interest rates twice so far in 2024 in a move that has been a major contributor to the USD/JPY losses this year and has also played a part in the USD’s weakness across Asia more generally.
The USD/JPY surged 1.9% and the move also pushed other markets higher, with the USD/SGD up 0.3% and USD/CNH up 0.1%.
The Japanese yen was weaker in most other markets.
Otherwise, markets remained cautious with ongoing tensions in the Middle East sparking fears of escalation. US shares were broadly flat.
The AUD/USD was flat while NZD/USD was down 0.3%.
USD waits on jobless claims data
Initial jobless claims will be reported tonight 10.30pm (AEST) ahead of tomorrow night’s all-important non-farm employment report.
Overnight, ADP employment figures were above expectations, at 143k versus 124k forecast.
Initial claims for unemployment decreased somewhat while continuing claims slightly increased. Data on claims have shown a little stabilisation in the increase of headline payrolls.
Although hiring and labour demand are down, a significant decline in the labour market is unlikely as long as layoffs are kept to a minimum.
After a 4.8% fall in the September quarter, the USD index has recently switched back into a short-term uptrend. Tonight’s jobless claims may serve as a catalyst for an extension of this move. Key level to watch for USD index is 102 for confirmation of breakout.
Euro extends losses
The euro extended recent losses overnight with tonight’s Europe producer prices number in focus. We’re looking for a 0.4% rise month over month in August.
Spain had a particularly significant increase in producer prices of 1.5% month over month in August, whilst Germany saw a more moderate increase of 0.2% month over month.
Chart shows German producer prices, currently seeing their largest drawdown since at least the 1970s.
We’ve seen four big days of selling in EUR/USD which has seen the market near key support level at 1.10 – a break of this level sets off further potential weakness.
Greenback higher, led by USD/JPY
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 30 September – 4 October
All times AEST
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*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
