Europe Summary and Highlights 28 Sep
Japan verbals, warning mkt to take yen view at face value, knocks USD/JPY back again
CHF remains on a weakening track on the back of uniquely low rates
EUR/GBP rejects resistance test again, market has got stretched short GBP
Oil back to nearer $110 than $100 as Trump rejects deal
Europe
USD/JPY reverses from bounce tests towards 158 (157.80 day high) to 157 (156.50 low) as Japan’s Mimura ups the verbals, warning the market should take ‘at face’ value the ‘very clear message’ from Japan and US on the yen and will be watching this closely. Adds that neither satisfied or reassured by underlying yen moves, and that ‘as a trend’ rate differentials have been narrowing as ‘BoJ remains on a clear rate hike path’.
CHF remains on trend weakening pressure out of recent CB moves that have further amplified its standout status for uniquely low rates and low tightening expectations. USD/CHF extends the rally to 0.8315~
EUR/GBP interesting, even with the modest sized slippage, as it continues to reject resistance at 0.86+, making the cross look a bit technically heavier on the charts. Worth noting that the IMM data showed the market had jumped to quite heavily short GBP positioning on a thematic (relative central bank) basis, so prone to being overstretched and correction/consolidation.
Main interest otherwise remains US-Iran, with Brent up another $3 with the front month back to nearer $110 than $100 again now (last $107.80) after Trump rejects the Iran proposal. Trump tells Axios that he expects negotiators to continue to talk this week but market optimism clearly flagging. Iran attempted to dangle the pre midterm carrot, while asking for a lot of benefits front loaded. Rejection leaves the current standoff ongoing.
Risk weighed, Nasdaq around -1%, SEK dragged.