9 Dec 2014
Day of reversal in markets – BBH
FXStreet (Barcelona) - The Brown Brothers Harriman observe today to be a day of reversal in the FX space as Yen reverses against the USD, outperforming it to trend back below 120 levels after reaching around 122 levels.
Key Quotes
“The dollar rose to new multi-year highs yesterday just shy of ¥122, then sold off to reach almost ¥119.50 today. To put this in context, the dollar has risen by more than 10% against the yen since the BOJ surprised with a 5-4 vote to accelerate its already aggressive monetary easing on October 31. There was no fundamental trigger for the move, though the sell-off in global equity markets may have encouraged some profit-taking. Much of the pressure, however, appeared to stem from the crosses, especially the dollar bloc. A poor business confidence survey saw the Australian dollar fell to $0.8225, and fueling more calls for rate cuts next year.”
“Chinese stocks also staged a dramatic reversal. The Shanghai Composite, which extended its recent moon-shot initially by taking on another 3% to bring the gains since the last November surprise rate cut to nearly 27%, reversed sharply to close 5.4% lower on the day. It was led by a 7.5% drop in financials, and almost as large a drop in the energy sector.”
“The yuan itself sold off sharply. It has declined by 1% since the end of last week. The dollar reached CNY6.2080 today, the highest level since July. The recent low was set at the end of October near CNY6.1080. We note, however, that the PBOC continues to guide the USD/CNY fixing lower.”
“Greek bonds are also staging a dramatic reversal today. Ten-year bonds yields had approached 8.5% in late November, but by the end of last week, yields had slumped to near 7.15%. The yield has jumped back toward 7.70% today. Greek stocks have slumped more than 8%, led by financials (-11%). The trigger was Prime Minister Samaras’ decision to bring forward the selection of the next Greek president.”
Key Quotes
“The dollar rose to new multi-year highs yesterday just shy of ¥122, then sold off to reach almost ¥119.50 today. To put this in context, the dollar has risen by more than 10% against the yen since the BOJ surprised with a 5-4 vote to accelerate its already aggressive monetary easing on October 31. There was no fundamental trigger for the move, though the sell-off in global equity markets may have encouraged some profit-taking. Much of the pressure, however, appeared to stem from the crosses, especially the dollar bloc. A poor business confidence survey saw the Australian dollar fell to $0.8225, and fueling more calls for rate cuts next year.”
“Chinese stocks also staged a dramatic reversal. The Shanghai Composite, which extended its recent moon-shot initially by taking on another 3% to bring the gains since the last November surprise rate cut to nearly 27%, reversed sharply to close 5.4% lower on the day. It was led by a 7.5% drop in financials, and almost as large a drop in the energy sector.”
“The yuan itself sold off sharply. It has declined by 1% since the end of last week. The dollar reached CNY6.2080 today, the highest level since July. The recent low was set at the end of October near CNY6.1080. We note, however, that the PBOC continues to guide the USD/CNY fixing lower.”
“Greek bonds are also staging a dramatic reversal today. Ten-year bonds yields had approached 8.5% in late November, but by the end of last week, yields had slumped to near 7.15%. The yield has jumped back toward 7.70% today. Greek stocks have slumped more than 8%, led by financials (-11%). The trigger was Prime Minister Samaras’ decision to bring forward the selection of the next Greek president.”