Sterling Awaits BoE Guidance Amid Stagflation Concerns; Yen Leads FX Markets
| Action Insight Daily Report 2-6-25 |
Sterling Awaits BoE Guidance Amid Stagflation Concerns; Yen Leads FX Markets |
Yen continues to dominate the forex market this week, additionally supported by further decline in US and European benchmark yields overnight. The persistent strength in Yen is being reinforced by hawkish rhetoric from a known hawkish BoJ board member, who reiterated calls for a gradual rate hike toward the 1% neutral level. While this stance isn’t new, the reaffirmation signals a continued push within the BoJ for higher rates. Recent economic data, including strong wage growth and Tokyo inflation, have provided additional support for the case of tighter monetary policy. As a result, Yen remains anchored as a favored currency, particularly amid falling yields in global markets. Meanwhile, market attention shifts to the British Pound ahead of today’s BoE policy announcement. A widely expected 25bps rate cut is already priced in, but the key drivers for Sterling will be the updated economic forecasts, voting split, and guidance from Governor Andrew Bailey. The ongoing debate over stagflation risks in the UK could lead to a further division within the Monetary Policy Committee. Any significant disagreement among policymakers would add further uncertainty to BoE’s rate path and could lead to Sterling volatility. Across the broader forex market, Yen remains the best performer of the week, followed by Canadian Dollar and Swiss Franc. On the other end of the spectrum, Dollar remains under pressure as the weakest currency, trailed closely by Euro and New Zealand Dollar. The Australian Dollar and Sterling are hovering in the middle.... |
USD/JPY Daily Outlook Daily Pivots: (S1) 151.66; (P) 153.06; (R1) 154.00; More... USD/JPY's fall from 158.86 is in progress and intraday bias stays on the downside for 38.2% retracement of 139.57 to 158.86 at 151.49. Strong support could be seen from there to complete the corrective fall from 158.86. Break of 153.70 minor resistance will turn intraday bias back to the upside for rebound. However, sustained break of 151.49 will raise the chance of bearish reversal. | |
| GMT | Ccy | Events | Actual | Forecast | Previous | Revised |
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| 00:30 | AUD | NAB Business Confidence Q4 | -4 | -6 | -7 | | 00:30 | AUD | Trade Balance (AUD) Dec | 5.09B | 6.73B | 7.08B | 6.79B | | 06:45 | CHF | Unemployment Rate M/M Jan | 2.70% | 2.60% | | 07:00 | EUR | Germany Factory Orders M/M Dec | 1.70% | -5.40% | | 09:30 | GBP | Construction PMI Jan | 53.7 | 53.3 | | 10:00 | EUR | Eurozone Retail Sales M/M Dec | -0.10% | 0.10% | | 12:00 | GBP | BoE Interest Rate Decision | 4.50% | 4.75% | | 12:00 | GBP | MPC Official Bank Rate Votes | 0--8--1 | 0--3--6 | | 12:30 | USD | Challenger Job Cuts Y/Y Jan | 11.40% | | 13:30 | USD | Initial Jobless Claims (Jan 31) | 214K | 207K | | 13:30 | USD | Nonfarm Productivity Q4 P | 1.80% | 2.20% | | 13:30 | USD | Unit Labor Costs Q4 P | 3.30% | 0.80% | | 15:00 | CAD | Ivey PMI Jan | 53 | 54.7 | | 15:30 | USD | Natural Gas Storage | -167B | -321B |
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