It has been a relatively fruitful market for stock indices worldwide over the last month and many seem content to consolidate at current ranges for the time being. Nonfarm Payrolls drop in a matter of hours however, so expect such peaceful conditions to shatter in the event of unexpected numbers. Consensus currently stands at 180k new jobs and an unemployment rate of 3.9%. We will soon find out.
Speaking of the unexpected, comments from Bank of Japan’s governor Kazuo Ueda prompted a surge in the Yen on Thursday, forcing USDJPY as low as 141 before closing at 144 Yen. Looking more closely at the actual meat of the speech however it is hard to see why. Ueda claimed the central bank will “patiently continue with monetary easing under Quantitative and Qualitative Monetary Easing with Yield Curve Control” adding that it will continue to conduct monetary policy with the aim of a 2% inflation target. Board member Nakamura echoed the same sentiment a week prior, stating that “more time is needed before making revisions to the monetary easing policy”. Someone obviously knows something we don’t.
The strength of the Japanese Yen contributed to weakness in the Dollar on Thursday, seeing the DXY lose half a percent, but the more interesting development lies in Europe. For all the talk of interest rate cuts in the US, it is in fact possible that the Eurozone will be the first to shift policy towards monetary easing. Poor economic performance all round may force the ECB’s hand, or so many traders are assuming. The Swiss Franc in particular has bid heavily against the Euro in the last two weeks, EURCHF falling as low as 0.9404 in intra-day trading yesterday. A record low.
