Recap 2014-12-09


USDJPY is correcting at the sharpest rate since October. It’s worth noting that USDJPY reversed sharply approximately 1.5 months after the first BoJ ease, and USDJPY sold off almost to pre-BoJ levels. That was after a ~26 figure move over 8 months, while this move is ~20 figures over 5 months. Risks of whipsaw moves seem quite high here given the speed of the move, the consensus views, and the historical precedents.


  • Australia NAB Business Confidence declined to 1 vs 4 prev
  • US NFIB improved to 98.1 vs 96.5 exp and 96.1 prev.
  • JPM on Greece: The fifth review of the current Greek program has turned out to be pretty tough. Disagreements continue about the size of the fiscal gap next year and other pending measures. It is clear that the review will not be completed by the end of the year when the current EFSF program expires. As a consequence, it was proposed yesterday that there will be a two month technical extension of the current EFSF program. Following this decision, the Greek government decided to bring forward the parliamentary votes for the election of a new president, which were originally scheduled for February. Presumably the motivation is to clear the political decks ahead of the final negotiations around the current program and what happens next. On the basis of opinion polls, Syriza would be the largest party in parliament following a general election, but it is not clear that they would be able to rule without being in a coalition. Exactly what Syriza would do in power is unclear. Its leader Tsipras has been softening his stance as he anticipates his party moving into government, but there is still a huge gap between what he would like Greece to do and what the rest of the region would like Greece to do. This political uncertainty is coming at a difficult time for the ECB as it contemplates sovereign QE.
  • Australia – the country’s bank regulator urged banks to halt mortgage lending to speculators but stopped short of introducing new rules to curb housing price gains – WSJ
  • Japanese fast-food company Yoshinoya Holdings on Tues said it would raise the price of its signature beef bowl in a move many consider an important piece of progress in the battle against deflation. This is the first price increase for this product in 24 years
  • Worst night for China in 5 years, Shanghai Comp down 5.4%, there was an 8.3% sell off from the intraday peak… Chinese gov’t tightened collateral rules for short term loans. CNY weakened 45bps vs the USD.


  • Tue: Australia Home Loans, China CPI
  • Wed: RBNZ, Japan Machine Orders, UK RICS House Price Balance, AU Employment
  • Thu: US Retail Sales, Jobless Claims, New Zealand PMI
  • Fri: China Retail Sales, IP, US Core PPI, UMichigan Confidence, Japan Tankan
  • Mon: US Empire Mfg, NAHB Survey, RBA Minutes, China HSBC Mfg PMI,

2 thoughts on “Recap 2014-12-09

  1. Why does the dollar weaken against the yen when global macro goes negative? is it because the fed will be dovish and push off raising rates?

  2. Couple reasons –
    1) long USD vs JPY is a very popular trade, so during risk off, as people are forced to cut positions, the cross will retrace
    2) Japan has a large positive net external investment position, and as they de-risk, they repatriate back to Yen

    the rates vector has historically been a major reason, but has fallen in significance given the BoJ’s QE program

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