Yen Dropped to 5-month Low

News Event

From Trading Economics: The Japanese yen fell further against the US dollar on Tuesday to its weakest level since June 1, after US retail sales data came in stronger than expected. The yen has already weakened 4% since November 8 after Donald Trump’s victory in the US presidential election led to a sell-off in US government bonds. The yen went down 0.4% to 108.9 per dollar around 12:45 PM New York time. The USDJPY changed +3.65% during the last week, +4.89% during the last month and -11.59% during the last year. Historically, the Japanese Yen reached an all time high of 306.84 in December of 1975 and a record low of 75.74 in October of 2011.

Market Snap

Market Closing Wrap

In European Equity Markets stocks edged up on Tuesday helped by a rise in crude oil prices and a rebound in utilities, while telecoms equipment maker Nokia fell on a disappointing earnings outlook update. The STOXX 600 rose 0.3 percent at the end of a choppy session. RWE rose 2.6 percent, supported by an upgrade to hold at Kepler. Nokia fell 3.8 percent. The company expects its sales to fall around 2 percent next year, in line with the broader telecoms network businesses in which it operates, but forecasts the market and its own business will return to modest growth in 2018. Monte dei Paschi fell 10 percent after the ailing Italian lender announced the terms of a debt-to-equity swap, a key plank of a plan to avoid the bank being wound down.

 

In Currency Markets the dollar held near an 11-month high against a basket of currencies on Tuesday as some stability returned to the U.S. bond market following a vicious sell-off, helped by unexpectedly strong data on U.S. October retail sales. Having hit an 11-month low of $1.0709 on Monday, the euro was up 0.1 percent to $1.0743. The dollar was up 0.3 percent at 108.79 yen after advancing to a 5-1/2 month peak at 108.96 yen earlier Tuesday. The onshore Chinese yuan fell to its weakest level in nearly eight years, breaking through 6.85 per dollar. Sterling fell 0.79 percent to $1.2397. The dollar index was little changed at 100.06 after rising to 100.25 shortly after the retail sales report.

 

In Commodities Markets  oil prices jumped as much as 5 percent on Tuesday, bouncing back from multi-month lows on renewed expectations that OPEC will agree later this month to cut production to reduce a supply glut that has weighed on prices for more than two years.  Brent futures rose 4.2 percent, to $46.31 a barrel, after reaching a session high of $46.41. U.S. crude rose $1.99 to $45.31 per barrel, a 4.6 percent gain, after hitting $45.42. Prices were on track for their biggest daily percentage gain since Sept. 28. Spot gold had added 0.5 percent to $1,225.88 an ounce. Among other precious metals, silver was up 0.7 percent at $17 an ounce, platinum rose 0.6 percent to $939 and palladium gained 1.2 percent to $706.

 

In US Equity Markets  the S&P 500 and the Nasdaq rose on Tuesday as tech stocks were back in demand after a post-election drubbing, while the Dow took a breather following a six-day rally. The Dow Jones industrial average was down 0.18 percent, at 18,834.86, the S&P 500 was up 0.29 percent, at 2,170.54 and the Nasdaq Composite was up 0.77 percent, at 5,258.72. Seven of the 11 major S&P sectors were higher, with the energy index's 2.14 percent rise leading the advancers. Home Depot fell 2.1 percent after the No. 1 U.S. home improvement chain reported strong third-quarter results but stood pat on its full-year sales forecast, implying a weaker-than-expected fourth quarter.

 

In Bond Markets  U.S. 30-year Treasury bond prices rose on Tuesday, after falling five straight sessions as investors took a breather selling government debt in the wake of a higher inflation outlook under the administration of President-elect Donald Trump. Benchmark 10-year note prices were up 1/32, yielding 2.217 percent, down from Monday's 2.222 percent. On Monday, they rose above 2.3 percent, the highest level since December. U.S. 30-year bond prices rose 21/32 in price, to yield 2.947 percent, from 2.983 percent late on Monday. U.S. two-year note yields, meanwhile, were at 1.012 percent, up from 0.988 percent late on Monday.

Source: Institute of Trading and Portfolio Management