Yen Big Winner; Markets Await Thursday Fireworks

 

USD

While the U.S. dollar experienced some relief overnight, except against the yen, the greenback remains at unfavorable ranges against the majority of its rivals. The dollar was under pressure again yesterday as a number of service data prints underwhelmed. There is no major data slated for release today or tomorrow so traders are already focusing on the many risk events set for Thursday. See JPY section for more.

The South African rand was the biggest looser after data showed that the economy sipped into a recession for the first time since 2009.

The Australian dollar was unchanged as the Reserve Bank of Australia kept rates on hold, as predicted by all of the economists polled by Bloomberg.

 

JPY 

The Japanese yen was the big winner overnight, gaining across the board as a traditional safe-haven. The yen rose over a percent against the U.S. dollar and touched a six-week high as a number of important risk events are slated for later this week. On Thursday, former FBI Director James Comey will testify before Congress. Yesterday, the White House announced that the President would not attempt to use executive privilege to block the testimony. Tensions in Washington are on the rise and markets have taken notice. Also on Thursday, the European Central Bank will release its policy decision and Brits head to polls for a snap Preliminary election. Add diplomatic tensions in the Gulf to the mix, and you have a recipe for a heavy safe-haven bid.

 

GBP 

The British pound is now stuck in ranges ahead of Thursday election with traders shrugging off economic data. Reports released yesterday showed disappointing service data in the U.K. but the release did not hurt the sterling.

Late Thursday we should start to get results of the U.K.’s parliamentary elections. The sterling rose sharply following the announcement of the snap election back in April as the Conservatives held a large lead in the polls. The Conservative’s hope was that they could consolidate power and strengthen their Brexit negotiation footing. However, recent polls have shown a tightening race, causing the currency to lose some of its gains. The outlook for the sterling, and the U.K. will likely become more clear by Friday.