Japanese Yen Futures Market News and Commentary
The dollar index (DXY00) this morning is up by +0.059 (+0.06%). Dec euro-fx futures (E6Z9) are down -0.0025 (-0.23%), and EUR/USD (^EURUSD) is down -0.0020 (-0.18%). Dec yen futures (J6Z9) are up +0.0001 (+0.01%), and USD/JPY (^USDJPY) is down -0.07 (-0.06%)was little changed. The dollar index is higher this morning on (1) weakness in the Chinese yuan on U.S./China trade concerns, and (2) weakness in EUR/USD on the outlook for easier ECB monetary policy. GBP/USD rallied on hopes for a Brexit deal. The Chinese yuan is down -0.19% against the dollar today after Bloomberg reported that China wants the U.S. to roll back tariffs on its goods before it could buy as much as $50 billion annually of U.S. agriculture products as part of the "phase one" trade deal. The yuan was also pressured by weak producer prices (which was dovish for PBOC policy) after today's data showed that the China Sep PPI eased to a 3-year low of -1.2% y/y. A positive factor for the Chinese yuan was today's Chinese credit data that showed China Sep new yuan loans rose +1.690 trillion yuan, stronger than expectations of +1.260 trillion yuan and the biggest increase in 6 months. Also, Sep aggregate financing, the broadest measure of credit growth, rose by +2.270 trillion yuan, stronger than expectations of +1.900 trillion yuan. In addition, today's data showed China Sep CPI rose +3.0% y/y, stronger than expectations of +1.9% y/y and the largest increase in 5-3/4 years. EUR/USD fell back today on dovish comments from ECB Governing Council member Vasiliauskas who said a simulative monetary policy in the Eurozone is "justified" given the gloomy global economic outlook. EUR/USD was underpinned by today's report that the German Oct ZEW survey expectations of economic growth index fell by only -0.3 to -22.8, stronger than expectations of -3.9 to -26.4. GBP/USD is up by +0.33% today on some Brexit optimism after the EU's chief Brexit negotiator, Michel Barnier, said that a Brexit deal is possible this week. Also, Finnish Prime Minister Rinne said today that an extension to the Brexit deadline may come up at the EU summit at the end of the week and there are grounds to consider it. Intensive talks are continuing to try to produce an agreement to be considered at the EU Summit this Thursday and Friday. If a Brexit agreement isn't reached by Saturday (Oct 19), the UK Parliament's Benn act requires PM Johnson to request an extension of the current Brexit deadline of Oct 31. The dollar was undercut by the IMF's cut today in in its global 2019 GDP forecast to a 10-year low of 3.0% from a 3.2% estimate in July, the fifth time this year that the IMF has cut its GDP forecast. Weaker global economic growth is dovish for Fed policy.