JPY Sharply Lower With AUD, NZD, GBP In Command As Silver Shines

across the board through the European session as USD/JPY climbed to ¥99.42, EUR/JPY rose to ¥131.37, GBP/JPY reached ¥154.91, and AUD/JPY gained to ¥89.51. JPY ignored better than expected numbers that saw Q2 capital spending improve to 0.0% with better company sales and higher company profits. Bank of Japan is not expected to alter monetary policy when the Policy Board convenes on Thursday but policymakers will clearly seek a weaker yen pursuant to Abenomics and the BoJ’s plan to engender inflation.

The Australian Dollar was stronger against most currencies through the European session as AUD/USD climbed to US$ 0.9013, EUR/AUD fell to A$ 1.4661, and GBP/AUD weakened to A$ 1.7279. A$ was supported by decent economic numbers that saw August PMI better to 46.4 from the prior 42.0 print and July building approvals were up 10.8% m/m and 28.3% y/y. Reserve Bank of Australia is expected to keep its Official Cash Rate target unchanged at 2.50% tomorrow.

The New Zealand Dollar gained ground against all major rivals through the European session as NZD/USD gained to US$ 0.7832, EUR/NZD fell to NZ$ 1.6869, NZD/JPY escalated to ¥77.74, and GBP/NZD came off to NZ$ 1.9878. Kiwi data released today saw the Q2 terms of trade index climb 4.9% q/q. The New Zealand Dollar was the worst performing major currency in August. RBNZ enacts new lending restrictions from 1 October to temper the torrid property market.

The British pound outperformed against most rivals through the European session as GBP/USD climbed to US$ 1.5592, EUR/GBP fell to £0.8471, and GBP/CHF improved to CHF 1.4541. Bank of England’s Monetary Policy Committee is expected to keep policy unchanged on Thursday following last month’s provision of forward guidance in which they confirmed they do not plan to hike interest rates until the unemployment level falls to the 7.0% level. UK data released today saw Hometrack August housing improve 0.4% m/m and 1.8% y/y and August PMI rallied to 57.2. BoE Governor Carney conducts a press briefing today ahead of the G20 summit.

The Euro was mixed against its peers through the European session as EUR/USD came off to US$ 1.3190 and EUR/CHF gained to CHF 1.2331. Eurozone August manufacturing PMI ticked higher to 51.4 despite a weaker expansion in Germany’s manufacturing sector to +51.8 and an unchanged reading of French PMI at 49.7. ECB member Coeure speaks today and German finance minister Schaeuble will speak about Greek financial assistance today. Eurozone July PPI will be released tomorrow.

Gold and was pushed lower through the European session as Gold fell to US$ 1373.73 after being capped at $1398.21 while Silver gained sharply to US$ 24.368 after finding support around US$ 23.065. Long gold positions climbed to their highest level since January according to CFTC data with speculators’ long positions in futures and options up 34% to 97,902 by 27 August. Short Gold positions fell 37% to 32,088, the largest decline in 11 months. Long silver speculative positions were up 2% to 16,469 contracts, the highest since February, according to CFTC data. Gold and Silver will take continue to take cues from the Syrian conflict. President Obama on 31 August indicated he will seek congressional authorisation to use military force against the Assad regime. Silver was also pushed higher following an improvement in Chinese manufacturing PMI to 51.0 while HSBC/ Markit manufacturing PMI also improved to 50.1.

Crude Oil was volatile through the European session as Brent futures gapped sharply lower to US$ 111.12 at the open and then recovered to $113.29 while WTI futures gained ground to US$ 107.03 and found support at $105.26. Brent crude gapped lower by about US$ 1.74 at the open and recovered while WTI futures were off for the third consecutive day. All eyes are on the US Congress to see if they authorise President Obama to launch a military strike against Syria. CFTC data saw net long positions in crude surge 4.9% to 317,523 contracts, one reason for the recent increase in WTI prices to a two-year high.