Intraday Market Thoughts

Safe Havens Slump, BoJ Next

by Adam Button
Feb 17, 2015 23:38

Gold and bonds fell on Tuesday, we look at why safe assets are less in demand. The kiwi was the top performer on better milk prices while the yen lagged. JPY will remain in focus with the BOJ next but an early taste of the BOJ decision came from the Japanese press. CAD was the 2nd performing currency and our Premium short in USDCAD at 1.2575 is +190 pips in the money. GBPUSD and 4 other Premium trades are in progress in our latest Premium Insights.

Gold fell more than $20 while US 10-year yields moved up 14 bps to 2.14% in the most-notable moves on the day. Higher yields helped USD/JPY climb as high as 119.40, up more than a cent from early in the week.

Signs of a thaw in Greek negotiations are evident with newswire reports about a Greek request for an extension to come on Wednesday. The semantics of the deal have quickly grown esoteric so we caution trading headlines until there is some genuine clarity.

Deposit outflows remain acute and that is the major risk to the slides in gold and bonds. Otherwise, US stocks touched a fresh record high Tuesday and the overall risk profile sanguine; at least in the near term.

Up later it's the BOJ decision. To start the week USD/JPY fell on reports from sources that the BOJ no longer wants to see additional yen weakness. The latest leak was from Nikkei and said the BOJ is considering raising its assessment on output. It comes after a soft Q4 GDP report but that could mean better growth in the months ahead.

Note that Lunar New Year holidays are now underway and will continue to ramp up for the remainder of the week and into next. That may add volatility to Asia-Pacific trading.


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