Market Drivers November 9, 2017
USDJPY can’t hold 114.00
Cable falls on Brexit worries
Nikkei -0.20% Dax -0.09%
Oil $56/bbl
Gold $1283/oz.

Europe and Asia:
AUD Home Loans -2.3% vs. 3.0%
CNY CPI 1.9% vs. 1.8%

North America:
USD Weekly Jopbless claims 8:30

A topsy-turvy session in FX markets today with dollar first showing some strength in Asia only to completely see flows turn around by London open as the buck sold off against everyone but cable.

USDJPY initially proved the 114.00 figure in Tokyo open, but the sudden reversal in the Nikkei – prompted by profit taking sent the pair below 113.50 within 30 minutes and it has remained at those levels ever since held down by US yields. With no eco data on the docket, the pair will continue to be driven by fixed income and equity flows and is unlikely to seriously challenge the 115.00 resistance unless the 10-year inches towards 2.50%

Elsewhere, the EU Commission upgraded its assessment of the EZ economy raising its growth estimate to 2.3% versus 1.7% as it noted that the region was enjoying its best economic performance in 20 years. However, the OECD noted that risks of a slowdown in UK have increased which resulted in wild divergence in performance of the pairs as euro rose above the 1.1600 figure while sterling sank below 1.3100. The pound may have also been weakened by reports that EZ is demanding a full plan for Brexit from UK within the next two to three weeks.

Overall, the tone going into North American trade suggests that the buck may be on the back foot as US yields remain moribund, enthusiasm for the passage of any meaningful tax reform starts to wane and short covering flows in EURUSD all drive the greenback lower as the day proceeds.