Dollar extends gains against JPY reaching seven year high

Monday, November 03, 2014

The dollar rose to a seven year high against the JPY as the greenback built on both Friday’s gains and the advantage of Japanese markets being closed today for the Culture Day holiday. The yen saw trading towards 112.99 against the dollar at one stage during overnight trading as market participants continued to make sense of the BOJ’s surprise move to expand the monetary base. The yen has lost almost 4.8% over the past five sessions as the central bank attempts to combat deflationary pressure and with recent economic data coming out of the US indicating a stronger outlook we could see further yen selling pressure in the near term.

The dollar index was subsequently supported to a four year high as moves overnight saw the index extend towards 87.40 before shedding some of these early gains as we approached the European open. Stronger US consumer confidence and manufacturing activity on Friday provided the support for the move higher with the Chicago Business Barometer coming in at 66.2 in October and exceeding expectations of a 60.0 reading from purchasing managers. The University of Michigan consumer confidence index also surprised on the upside, rising to 86.9 in October from 86.4 the previous month, lending further support to the US dollar and further underscoring the comparative strength of the US market.

China’s official manufacturing PMI fell to 50.8 in October against expectations of a modest m/m increase to 51.2 from 51.1 in September. The month-on-month slowdown added further fuel to concerns that policymakers were struggling to halt the broad economic slowdown with the official non-manufacturing PMI index confirming calls for Beijing to step up supportive efforts. With momentum waning gradually throughout the second half of the year and the economy facing considerable headwinds as key drivers such as fixed asset investment slows, investors will be keeping a close eye on the outlook for key sectors including the property market, heavy industries and tourism.

JPY trades towards 112.99 against the dollar overnight

JPY Curncy Japanese Yen Spot 2014 11 03 07 27 49

DXY builds on Friday's gains 

DXY Curncy DOLLAR INDEX SPOT 2014 11 03 07 35 15

Chicago business barometere rises m/m in October

CHPMINDX Index MNI Chicago Busi 2014 11 03 07 37 34

Consumer confidence reaches a seven year high

CONSSENT Index University Of Mi 2014 11 03 07 37 25

Events for today

JP Market Holiday 

0200

CN

Oct

Manufacturing PMI (01/11/14)

0200

CN

Oct

Non-Manufacturing PMI

0200

CN

Oct

HSBC Manufacturing PMI

0855

DE

Oct

Markit Manufacturing PMI

0900

EZ

Oct

Markit Manufacturing PMI

0930

UK

Oct

Markit/CIPS Manufacturing

1445

US

Oct

Markit Manufacturing PMI

1500

US

Oct

ISM Manufacturing

1500

US

Sep

Construction Spending

Topics: PMI, JPY, BoJ, DXY
More from: Kash Kamal