Headlines:
- Japanese yen surge on Ueda remarks the big story to start the new week
- Japan's Matsuno: Monetary policy specifics are up to BOJ to decide
- European Commission cuts Eurozone growth forecast amid building recession risks
- PBOC to tighten scrutiny on bulk dollar purchases of $50 million and above - report
- Yuan exchange rate has solid basis to stay reasonably stable - PBOC
- China August M2 money supply +10.6% vs +10.7% y/y expected
- SNB total sight deposits w.e. 8 September CHF468.9 bn vs CHF 467.6 bn prior
- Kremlin confirms North Korea's Kim Jong Un to visit Russia in the coming days
Markets:
- AUD leads, USD lags on the day
- European equities higher; S&P 500 futures up 0.4%
- US 10-year yields up 4.6 bps to 4.302%
- Gold up 0.3% to $1,924.28
- WTI crude down 0.6% to $86.96
- Bitcoin down 1.1% to $25,609
The major story so far today remains the surge in the Japanese yen, following weekend comments by BOJ governor Ueda touting a "quiet exit" from the current ultra easy monetary policy settings.
As European trading began, USD/JPY extended losses by over 1% in a drop to 145.90 before recovering back to around 146.70 levels now - still down by 0.7% or 100 pips on the day.
The unwinding in USD/JPY longs also led to a notable decline in the dollar across the board. The antipodeans benefited the most amid a jump in the Chinese yuan as well, helped by some support from Beijing.
AUD/USD is up 0.9% to 0.6430 and keeping at the highs while NZD/USD is up 0.6% to 0.5915, also maintaining gains for the most part.
The euro and pound are only marginally higher against the dollar with EUR/USD up 0.2% to 1.0720 and GBP/USD up 0.4% to 1.2510 with the latter hoping to stop a run of four straight consecutive daily losses.
As the yen legged higher, it comes as 10-year JGB yields also hit the 0.70% threshold and that is underpinning bond yields in general. 10-year Treasury yields are up 4.6 bps to 4.302%, so that is also one to watch as it threatens the August highs. The dollar might be pressed lower now but higher yields could yet be a saving grace for the greenback.
In the equities space, stocks are capitalising on the softer dollar with European indices and US futures holding a slight advance. But we'll see if there is appetite to keep that going through the week, with the US CPI report coming up on Wednesday.
