Norges Bank and JPY

A quick note today:

USD yields above 3% will give support to the USD against the JPY in particular given the fact that the Japanese authorities are committed to continuing the current policy of “Ultraloose monetary policy” in  a continued attempt to raise inflation in Japan.  The Bank of Japan has a firm commitment to maintain low rates for a long period of time.

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USDJPY

Norges Bank came out today and all eyes were on the what the future path of interest rates will be.    The Central bank left the future path unchanged and gave the market the message that the next rate hike will most likely be in Q1 2019..  The market was looking for the bank to be a bit more aggressive in terms of the next hike and the future path, with a possible adjustment upwards of 10 bps.  This was the first hike in years and the market is testing the 9.60 level which we see as resistance for now  There was a danger that the market had front run the decision and the move from 9.80 to 9.50 level is all we will see short term.  We will look for more clues during the press conference which starts soon.

EURNOK

In other Markets

Brent crude is fighting to break the $80 level and should it manage to do so we look for at least $85.

U.S. Equity markets traded sideways and for the week are unchanged for the most part, while the Chinese market is up on the week.  No reaction to the escalation of the trade war between the two countries as of yet!

USD: is trading weaker this week, consolidation before push higher  or is the greenback stalling?  We are seeing some high profile investors and analysts expecting the USD to weaken into the year end as the market will have priced in all of the Feds hikes and will have to take into consideration the ongoing trade wars and that the growth differentials between Asia and Europe versus the U.S. will diminish.

Gold: In holding pattern and trading back and forth around the $1200 level.   Needs to break $1180 or $1220 to warrant much interest

TickerDate OpenedEntry PriceStopTarget PriceCurrent Price
EURUSD Put Option / Strike 1.1300 / Exp. 26 of Sept.2/70.0056premiumbelow 1.13000.0002

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