Headlines:
- Japanese yen surge continues in European morning trade
- Japan top currency diplomat Kanda says no choice but to respond to speculators
- US futures fall further as tech shares feel skittish
- Traders trim BOE rate cut bets for August after inflation data
- UK June CPI +2.0% vs +1.9% y/y expected
- Eurozone June final CPI +2.5% vs +2.5% y/y prelim
- Fed's Williams says rate cut could be warranted in the coming months
Markets:
- JPY leads, USD lags on the day
- European equities lower; S&P 500 futures down 1.0%
- US 10-year yields up 0.8 bps to 4.175%
- Gold up 0.1% to $2,470.15
- WTI crude up 0.4% to $81.05
- Bitcoin up 0.3% to $64,850
It was an eventful session with some big market moves this time around in European morning trade.
The Japanese yen came to life with USD/JPY falling from 158.30 in Asia all the way to a low of 156.10, before a light bounce after.
The move was a strong one-sided pull lower but spread across three hours. It wasn't quite the sharp minute moves that we saw during the intervention last week. But still, there could be the possibility of Japan giving things a slight nudge to help with the move lower.
I mean, they have been changing up their strategy as of late to intervene when market conditions favour their directional view.
There were also other factors in play during the session, most notably a selloff in equities. That alongside a weaker dollar is arguably exacerbating the drop in USD/JPY, coupled with a technical break here.
After the gains yesterday, US stocks look set for an off day with futures pushed lower. S&P 500 futures are down 1% with tech shares slumping hard. Nasdaq futures are down 1.6% while Dow futures are "only" down 0.3%. Russell 2000 futures are down 0.8% but briefly erased losses early on in European trading.
The softer risk environment is seeing USD/CHF also down 0.8% to 0.8865 while EUR/USD is up 0.4% to 1.0940 on the day. At the same time, GBP/USD is also pushing above 1.3000 for the first time in a year as UK inflation remains stubborn in June. That saw traders scale back on bets for an August rate cut.
