Intervention, at last?

Thoughts of the Day

Japan’s Ministry of Finance likely intervened in the USDJPY market by selling USD through the Bank of Japan. After briefly touching 160.21, USDJPY crashed to 155.20, recovered to 157.20, then dropped to 154.50 before creeping back to 156.80. Despite no official confirmation, the intraday volatility suggests intervention to curb JPY weakening. Expect ongoing wild swings.

This is an abridged version of our CIO’s daily writeup for the day, to view the full version, please login or subscribe to a membership plan.

Trading Tip

Daily trading tips are for members only, please subscribe to a membership plan to view.

Day Ahead

Euro Area Inflation (Headline: +2.4% YoY expected and prev, Core: +2.6% YoY expected and +2.9% prev)

Our Trading plan is only available for members, please subscribe to a membership plan to stay updated on Vee’s trades.

What Happened Yesterday

Market Movements as of New York Close 29 Apr 24

Chinese PMIs (NBS Manufacturing PMI: 50.4 actual vs 50.3 expected and 50.8 prev, NBS Non Manufacturing PMI: 51.2 actual 52.2 expected and 53.0 prev, Caixin Manufacturing PMI: 51.4 actual 51 expected and 51.1 prev). The China A50 rose +0.19% in reaction to the data release as the manufacturing sector continues to show signs of growth.
The Japanese Ministry of Finance was rumoured to have intervened and sold USDJPY. (see below for more details)

The US 2-year bond yield fell -0.02% to 4.98% while the 10-year yield fell -0.05% to 4.62% resulting in the US Treasury Yield curve inversion widening to 0.36%. 

The US stock futures traded within a small range through the Asian and London trading sessions. The S&P 500 futures was up merely +0.14% from the Asian open when the New York session began.

The US stock market opened higher from Friday (S&P 500: +0.28%, Dow Jones: +0.11%, Nasdaq: +0.47%). It then continued to range trade during the New York session as well due to the lack of market drivers. The S&P 500 finished +0.32% higher on the day (high: +0.46%, low: -0.22%), the Dow Jones rose +0.38% (high: +0.44%, low: -0.06%) while the Nasdaq increased +0.36% (high: +0.57%, low: -0.27%).

The crypto market traded mixed on the day with Bitcoin up +1.1% and Ether down -1.5%. Bitcoin traded weak earlier in the day, going as low as 61,803 (-2.15%) when the New York session began. It then started to recover during the New York session and closed higher on the day.
This is a partial analysis of what happened yesterday, for a more detailed analysis, subscribe to a membership plan.

Headlines & Market Impact

Japanese yen strengthens sharply after hitting 160 against dollar for the first time since 1990

Notable Snippet: The yen briefly touched 160.03 against the dollar, the weakest level since April 1990 when it touched 160.15, according to FactSet data. The currency strengthened by midday to trade around 156.5 against the dollar.

The Commonwealth Bank of Australia said Japan’s Ministry of Finance is expected to publish Tuesday its market intervention statistics for March 28 to April 26. It said, however, “We have not seen any media reports that confirm intervention.”

“Today’s JPY volatility may reflect the skittishness of markets amid thin liquidity. We will unlikely receive comments from Japanese officials today because Japan is on holiday,” the bank said.

Japanese authorities have repeatedly warned against “excessive” moves in the yen, but have made no official announcements about bolstering the currency. Some market watchers had suspected authorities would intervene at the 155 level, but the yen slid past that mark last week.

Vincent Chung, associate portfolio manager for T. Rowe Price’s diversified income bond strategy, noted that officials seem more focused on volatility in the currency, rather than specific levels.

We have further analysis of our headlines! Subscribe to a membership plan to view them.

Japan March jobless rate stays flat at 2.6%

Notable Snippet: Japan’s jobless rate in March was unchanged at 2.6% compared to February, government data showed on Tuesday.

The seasonally adjusted unemployment rate compared with economists’ median forecast of 2.5%.

The jobs-to-applicants ratio rose to 1.28 in March from 1.26 in February, separate labour ministry data showed. The median forecast was for 1.26.

Japan March factory output rises 3.8% vs month earlier

Notable Snippet: Japan’s factory output rose 3.8% in March from the previous month, versus the median market forecast for a 3.5% rise, government data showed on Tuesday.

Manufacturers surveyed by the Ministry of Economy, Trade and Industry expect seasonally adjusted output to increase 4.1% in April and expand 4.4% in May.

Separate data showed Japanese retail sales expanded 1.2% in March from a year earlier. The result was below the median market forecast for a 2.2% rise but marked the 25th consecutive month of expansion.

Compared with the previous month, retail sales shrank 1.2% in March, following a 1.7% gain in February, the data showed.

We have further analysis of our headlines! Subscribe to a membership plan to view them.

Tesla jumps 15% after passing key hurdle to roll out advanced driver-assistance tech in China

Notable Snippet: Shares of Tesla rose sharply on Monday, their best day since March 2021, after the electric carmaker passed a significant milestone to roll out its advanced driver-assistance technology in China.

The company’s share price closed up 15% as investors reacted to news surrounding Tesla CEO Elon Musk’s visit to China.

Tesla on Sunday said local Chinese authorities removed restrictions on its cars after passing the country’s data security requirements.

The move raised expectations that Tesla’s driver-assistance software Full Self-Driving, or FSD, would soon be available in the country, which is the largest market for electric vehicles.

FSD is an upgrade to Tesla’s Autopilot driver assistant. Tesla has offered its FSD technology in China for years, but with a restricted feature set that limits it to operations, such as automated lane changing.

Tesla also reportedly scored a deal with Baidu that would give Musk’s firm access to the Chinese internet giant’s mapping and navigation technology for Tesla’s FSD feature.

The agreement would allow Tesla to tap into Baidu’s mapping service licence, which is a requirement for intelligence driving systems to operate on public roads in China, Reuters reported, citing two anonymous sources familiar with the matter.

We have further analysis of our headlines! Subscribe to a membership plan to view them.

Sentiment

FX

Stock Indices

Best,
Phan Vee Leung
CIO & Founder, TrackRecord