The JPY has given back some of yesterday’s gains during overnight Asian trading. USD/JPY having closed out Wednesday in North America around 92.70 is presently up at 93.20, while EUR/JPY has bounced to 129.55 from around 128.70.
Not surprisingly, given yesterday’s accelerated JPY gains, we’ve had some verbal intervention from the Japanese authorities, with a government official opining that excessive moves are undesireable and warning that market is being watched carefully. Important technical resistance for USD/JPY now lies just ahead at 93.50.
China’s State Information Centre feels the country’s economy will grow around 8% this year, and that while it has probably bottomed doesn’t mean it has begun recovery.
China’s car sales rose a hefty 48% in June, the biggest jump since February 2006. The news will have helped lift general sentiment.
Elsewhere, Australian June unemployment has come in marginally better than expected at 5.8% compared to a median forecast of 5.9%, which will have lifted sentiment a smidge.
Today the big event in Europe is the Bank of England interest rate decision. Rates almost certain to be left on hold, but the important thing for the market is what happens with QE.
There has been growing speculation the Old Lady will extend the programme by a further £25 bln to the £150 bln ceiling. Such a move (which would be seen as a negative for sterling) is most probably at least partially discounted in the current cable rate.
The big danger for sterling is if the authorities signal the programme is likely to be entended even further.
