This week's market moves continued yesterday with continued weakness on the EUR and gains on USD, despite ADP job numbers coming in lower than expected. The main driver in FX continues to be the markets easing the amount of rate cuts expected by the Fed next year, whilst increasing the chances of rate cuts by the ECB in March 2024.
Overnight, JPY gained on speculation that we could see tightening on monetary policy in next week's central bank meeting. Speculation increased after meeting between Governor Ueda and PM Kishida discussing wages and monetary policy.
* Daily move - against G10 rates at 7:30am, 07.12.23
** Indicative rates - interbank rates at 7:30am, 07.12.23
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JPY moves will likely to take precedence today following the moves overnight, with GBPJPY - as at time of writing - down 1.2%. The gains on JPY have dampened USD gains, and ahead of job numbers tomorrow we could see a lacklustre USD market today. Initial jobless claims are due later today, but we expect little impact from these. Worth noting also on a technical basis GBPEUR is near overbought levels now, following gaining 2.5% since the 21st November.
JPY is the biggest mover on speculation that next week's BoJ meeting will be treated as “live”, and we could see the Bank exit negative interest rates. Last night's price action saw the March uptrend breach, suggesting further gains for JPY.
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