USDJPY, H1
Consumer confidence is expected to ease to 134.0 in September from 135.1 in August and an 8-month high of 135.8 in July, versus a 16-month low of 121.7 seen as recently as January, and an 18-year high of 137.9 in October. Market expectations are for a drop-back in the current conditions reading to 173.0 from a 19-year high of 177.2 in August. The expectations index should rise to 108.0 in September from 107.0, versus an 18-year high of 115.1 last October. The jobs strength diffusion index is poised for a drop-back from a remarkably lofty 19-year high in August of 39.4. Overall, confidence measures remain historically high. The data is released at 14:00 GMT.
Narrow ranges have been prevailing among the main currencies so far today. EURUSD has been maintaining a less than 15 pip range just under 1.1000 and above yesterday’s 12-day low at 1.0966. The German Ifo data came in a tick better than expected at 94.6, vs 94.5 expected and 94.3 last time.
Cable has been in a similarly narrow range under 1.2450. The UK’s Supreme Court will rule on the government’s appeal of the illegal verdict reached by Scotland’s highest court regarding its five-week suspension of Parliament. We suspect, although this is by no means a certainty, it will agree with the recent court rulings seen in England and Northern Ireland, that the matter was “non-justiciable” — being political rather than a legal matter. If it did rule it illegal, it’s not crystal clear what will happen, though ultimately the UK is headed for a general election so it may not make a great deal of difference in the bigger Brexit picture.
Elsewhere, USDJPY has settled around 107.60, above the two-week low seen yesterday at 107.31 and capped at the 200-period moving average at 107.75. Yen crosses including EURJPY and AUDJPY have seen a similar settling-above-lows price action. Recent declines in USDJPY and Yen crosses have been driven by safe haven demand for the Japanese currency. Global stock markets have continued a sputtering price action following some mixed signals from the US-China front, and with a US-Japan trade deal snagging up as Tokyo looks for assurances on car tariffs. Dissonance prevails in investor thinking on the US trade war, with reasons for optimism coexisting with reasons for caution. The trade spat has been dragging on for well over a year now, and the pattern so far in the repeated rounds of (so far) fruitless discussions is that initial optimism and upbeat and at times conciliatory rhetoric gives way to disappointment.
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Stuart Cowell
Head Market Analyst
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