(23 JULY 2018)DAILY MARKET BRIEF 1:JPY better bid as BoJ is expected to re-think its QE program
The week gets off to a slow start as investors continue to focus on trade war developments. Donald Trump did not just sit around over the weekend. Indeed, beside the fact that he showed no sign of backing down in its trade rhetoric with China and Europe, President Trump responded violently to Iranian President Rouhani in an all-caps tweet. Market participants appeared to be not too concerned about rapid escalation in rhetoric. After all, the market is used to Trump’s sense of exaggeration. Last summer, he promised “fire and fury” to North Korea, a year later Kim and Donald are best friends and North Korea has not shut down nuclear production yet.
Within the G10 complex, the Japanese yen rose the most against the USD with USD/JPY easing to 110.75, the lowest level since July 11th. Over the last two days, the yen appreciated more than 2% amid rumours that the BoJ is considering modifications to quantitative easing programme. Indeed, Kuroda has promised that the 2% inflation target would be hit by 2015… USD/JPY bounced back on the 110.77 support (low from July 11th) and consolidated around 111. On the downside, the low from July 4th (110.28) will act as next support. The Swiss franc also resisted quite well as USD/CHF slid to 0.9915.
By Arnaud Masset
