Market Drivers March 28, 2018
- USD/JPY pops then drops
- Cable flushed up and down
- Nikkei -1.34% DAX -1.53%
- Oil $65/bbl
- Gold $1341/oz.
- Bitcoin $7886
Europe and Asia
No data
North America
USD: GDP 8:30
It’s been another seesaw night of trade in the currency market with cable and yen yanking both longs and shorts out of their positions as thin markets, lack of data and end of month flows caused V-shaped moves in both Asian and European session trade.
In Asia, USD/JPY was initially driven lower after yet another ugly close in equities in yesterday’s New York trade, but then news that Kim Jong Un visited China last week, infused a note of relief into the market as traders assumed that North Korea may be willing to make concessions on denuclearization on the peninsula. USD/JPY rose all the way to 105.75 but dropped back when European bourses opened up lower.
In the UK a story from Times suggested that UK may have come up with a fresh solution to the hard border issue with Ireland and that helped fuel a rally in cable in early Asia. The pair eventually was able to just take out the 1.4200 figure but then plunged in early Frankfurt on yet more end of month flows hitting a low of 1.4135 before finally catching a bid. The up and down action left both long and shorts befuddled, but once the real money supply is finished cable could make another foray towards the highs, especially if the Brexit story proves true and progress has been made on the Irish border issue which remains the toughest political and economic barrier in the negotiations.
Meanwhile, USD/JPY which remains battered is desperately trying to carve out some kind of a tradable bottom after months of selling price action. Today US GDP data is projected to print at 2.7% versus 2.5% eyed. If the number meets or beats the forecast it would provide the type of fundamental support that USD/JPY has sorely needed. Stronger than expected growth could convince the market that US yields are headed higher and push USD/JPY through the 106.00 figure as the day proceeds. A miss however, would only confirm the bears' worst fears that the US economic growth has actually peaked, that the Fed is behind the curve and that monetary policy may have to reverse quickly as aggregate demand slows, all of which could push USD/JPY to fresh cycle lowe.