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USD/JPY has dribbled off its session high after verbal intervention remarks.

• Japan verbal intervention to support the yen – Fin Min Kato will take action

Japan’s Finance Minister Katsunobu Kato reiterated concerns about speculative yen selling as the currency hit 158.40 per dollar. This is not far from 160, a level that triggered intervention six months ago.

Speaking at a press conference, Kato emphasized that the government is alarmed by sharp, one-sided moves in the foreign exchange market, particularly those driven by speculators, and is prepared to take action against excessive volatility.

USD/JPY rose to its strongest since July, supported by higher U.S. Treasury yields. The yen has remained under pressure due to widening U.S.-Japan interest rate differentials, with limited prospects for narrowing in the near term. This pressure is exacerbated by uncertainty surrounding U.S. President-elect Donald Trump’s tariff policies, which could lead the Federal Reserve to maintain higher interest rates.

USD/JPY update:

This article was written by Eamonn Sheridan at www.forexlive.com.

Japan finance minister Kato:

• Won’t comment on forex levels.
• Recently seeing one-sided, rapid moves.
• Important for currencies to move in a stable manner reflecting fundamentals.
• Alarmed over FX moves, including those driven by speculators.
• Will take appropriate action against excessive moves.

I bolded some of those words, these are the signals used to convey concern is at a higher than usual level.

USD/JPY hasn’t dropped too much:

We knew this sort of commentary was coming. Was sooner than I expected TBH:

• USD/JPY above 158.40 – when do we get intervention remarks from authorities?

This article was written by Eamonn Sheridan at www.forexlive.com.

USD/JPY has hit highs above 158.40.

I don’t know how effective verbal intervention will be, but Japanese authorities will give it a shot regardless.

This article was written by Eamonn Sheridan at www.forexlive.com.

Canada’s federal government is weighing early release of a proposed list of American goods that would be targeted by retaliatory Canadian tariffs if Trump hits Canada with tariffs.

Report comes via Canadain media (gated)

This article was written by Eamonn Sheridan at www.forexlive.com.

Trudeau gone, Carney says he thinking about stepping up to be PM:

This article was written by Eamonn Sheridan at www.forexlive.com.

Officials from:

• the People’s Bank of China
• the National Development and Reform Commission of the People’s Republic of China (NDRC)
• China’s Ministry of Finance

Will hold a briefing at 10 am Beijing time on Wednesday, January 8, 2025

• 0200 GMT
• 2100 US Eastern time

Topics will include:

• expansion of consumer goods trade-in program

This article was written by Eamonn Sheridan at www.forexlive.com.

Not seeing much news on the yen at all, apart from what has already been posted.

There is some news about on Nippon Steel:

• The firm’s CEO says we believe a fresh review by new CFIUS members under the incoming US administration could lead to a better understanding

Background to this is US President Biden blocking the takeover deal. I wonder if Trump will view it differently?

Anyway, back to USD/JPY, bit its highest since July 17 last year

This article was written by Eamonn Sheridan at www.forexlive.com.

Australian November 2024 Building Permits

-3.6% m/m

• expected -1.0%, prior +4.2%

+3.2% y/y

• prior +6.1%

Private sector houses fell 1.7% (prior -5.2%), to 9,028, while private sector dwellings excluding houses fell 10.8%, to 5,285.

This article was written by Eamonn Sheridan at www.forexlive.com.

Tech Stocks Push Higher – Nasdaq Up 1.25%

US tech stocks climbed higher yesterday on what many considered the first ‘proper’ trading day of the year. The CAD rose after Canadian Prime Minister Justin Trudeau announced he will be stepping down. The Dow Jones edged 0.06% lower on the day, but the tech-heavy S&P 500 and Nasdaq powered ahead, closing up 0.55% and 1.24%, respectively.

The dollar took another significant step backward, with the DXY dropping 0.63%. Longer-dated yields continued to rise, with the 2-year yield losing 0.4 basis points to settle at 4.274%, while the benchmark 10-year gained 3.3 basis points to reach 4.630%.

Oil prices retreated after recent gains, with Brent crude falling 0.39% to $76.21 and WTI dropping 0.74% to $73.41. Gold had a volatile session but ultimately finished close to flat, ending the day down 0.17% at $2,635.60 an ounce.

Tariffs in Focus for Markets

Global markets experienced sharp moves yesterday as conflicting updates on potential tariffs from the incoming US government impacted financial products. Reports suggesting that tariffs might not be as severe as expected when the new President takes office boosted tech stocks and weakened the dollar. However, this has since been refuted by Donald Trump, causing some earlier market moves to be pared back.

Traders expect more volatility in the coming weeks as tariffs remain a key issue. Confirmation of swift and significant tariffs could lead to stock corrections and dollar appreciation. Conversely, if tariff implementation appears to be scaled back or delayed, stocks are likely to rise further, and the dollar could retreat into recent ranges.

Data Calendar Picks Up from Today

This week marks a significant start to the year for US economic data, culminating in Friday’s key Non-Farm Payrolls report and Unemployment Rate. The calendar becomes more active from today, with traders anticipating market moves tied to data releases.

The Asian session has little scheduled, but the European open will feature crucial inflation data from Switzerland in the form of the latest CPI numbers. In the US session, the first of four job-related reports for the week will be released early, with the JOLTS Job Openings figure expected to show 7.73 million available positions.

The US ISM Services PMI and Canadian Ivey PMI numbers are also due, but market focus is likely to center on the job update.

The post General Market Analysis – 07/01/25 first appeared on IC Markets | Official Blog.

People’s Bank of China USD/CNY reference rate is due around 0115 GMT.

The People’s Bank of China (PBOC), China’s central bank, is responsible for setting the daily midpoint of the yuan (also known as renminbi or RMB). The PBOC follows a managed floating exchange rate system that allows the value of the yuan to fluctuate within a certain range, called a “band,” around a central reference rate, or “midpoint.” It’s currently at +/- 2%.

How the process works:

• Daily midpoint setting: Each morning, the PBOC sets a midpoint for the yuan against a basket of currencies, primarily the US dollar. The central bank takes into account factors such as market supply and demand, economic indicators, and international currency market fluctuations. The midpoint serves as a reference point for that day’s trading.
• The trading band: The PBOC allows the yuan to move within a specified range around the midpoint. The trading band is set at +/- 2%, meaning the yuan could appreciate or depreciate by a maximum of 2% from the midpoint during a single trading day. This range is subject to change by the PBOC based on economic conditions and policy objectives.
• Intervention: If the yuan’s value approaches the limit of the trading band or experiences excessive volatility, the PBOC may intervene in the foreign exchange market by buying or selling the yuan to stabilize its value. This helps maintain a controlled and gradual adjustment of the currency’s value.

***

2025 has begun with Asian currencies weakening against a strong USD, with the yuan very heavy. To maintain a stable fixing below 7.3 to the USD, the PBoC is continuing direct and indirect interventions while cautioning mutual funds against stock sales. December data, expected this week, could further pressure CNY if results are unfavourable.

This article was written by Eamonn Sheridan at www.forexlive.com.

British Retail Consortium (BRC) data for December 2024:

Total sales +3.2% y/y, biggest jump since March 2024

• November was -3.3%
• Note, Black Friday fell in the BRC’s December period in 2024 and in November in 2023, distorting year-on-year comparisons

Like-for-like sales +3.1% y/y

• November -3.4%

Summary:

• Black Friday boosted retail sales in late 2024, with a 3.2% year-on-year rise in December after a 3.3% drop the previous month.
• However, quarterly sales growth was just 0.4%, indicating a decline in volumes when accounting for inflation.
• Retail sales for the full year rose modestly by 0.7%.
• The British Retail Consortium attributed the lackluster performance to weak consumer confidence and economic challenges, compounded by tax increases under the new Labour government.
• Separately, Barclays’ card data showed flat December spending, with declines in essentials offset by modest gains in non-essentials, including a 52% surge in cinema spending driven by films like Wicked. Economists predict stronger consumer spending in 2025 due to expected real wage growth and higher household savings.

BRC like-for-like sales is a metric reported by the British Retail Consortium to measure changes in retail sales, excluding the impact of new store openings or closures.

• It reflects sales performance only from stores that have been open for at least a year, providing a clearer view of underlying trends in consumer spending without distortions from changes in retail floorspace.

  This metric is widely used to assess how well retailers are performing in comparable, established locations, making it a reliable indicator of real growth or decline in sales.

This article was written by Eamonn Sheridan at www.forexlive.com.

TD Securities with a controversial view:

• “We don’t think that local politics are driving CAD all too much.”

Sheesh … the jump for CAD was pretty clearly related to the news of Trudeau to resign.

Anyway. More. TD says it remains bearish on CAD, despite Trudeau leaving office:

• “For CAD to benefit from any change in leadership, there needs to be a strong pivot… favoring a more pro-business government”
• “There is no clear path here”
• CAD strength on Monday likely had more to do with markets reassessing risks about the incoming Trump administration’s tariff policy

This article was written by Eamonn Sheridan at www.forexlive.com.