Rising sun
Momentum in USDJPY is "favouring the downside," says Dan Juhl Larsen from Copenhagen's FX desk. "The market believes there is a significant risk to the downside in USDJPY over the next 24 hours although there is no guarantee of this."
Saxo Bank's head of forex John Hardy points out that a 38.2% retracement of the pair would see USDJPY down to 113.70. "Nothing as dramatic as that is going to happen yet," says Hardy, "but it shows how far this has come and gives some context."
A raft of Japanese data this evening is also likely to flavour developments, says Juhl Larsen. "Stay alert – lots of Japanese numbers are out tonight and they will indicate if what they are doing in Japan is on the right path or not."
Weak Opec
Opec is looking a shadow of its former self in the run up to today's pivotal meeting. "Opec is not really taking charge here," says Saxo Bank's head of equities Peter Garnry adding that the pain is filtering through to the sector where, for example, the likes of Seadrill suspend dividends after "getting hammered".
WTI and Brent crude oil fell to respective lows of $72.61/barrel and $76.28/b, Christian Moltke reports from Saxo Bank's Asia hub in Singapore. In the last few months, the sector has lost something like $600 billion in revenues on the back of sliding prices.
Pressure on oil prices is only likely to increase, says Garnry. "All comments from the US is that shale gas producers are likely to r amp up production even more."
That price-induced pain is also having a telling effect on some bonds, warns Fixed Income desk's Miichael Boye, pointing to pressure on the likes of Gazprom, Petrobras and Petroleos de Venuzuela.
Sterling doubts
Hardy casts doubt on the sustainability of the GBP rally, branding it "rather unjustified." Hardy cites the 2-year rate differentials for the UK versus the US as evidence. "I'm looking tactically for some bearish reversals to get involved on the short side."
Hardy adds, nevertheless, that "the dollar is dead in the water after disappointing data out of the US." In particular, he warns that another poor weekly claims number is evidence of "a trend in the wrong direction."
Russia loans fear
Russian syndicated loans are down 80% on the first half of 2014, indicating that "the situation there is only likely to deteriorate," says Garnry.
"This is massive. There have only been three deals outside Russia among corporates. We are extremely negative on Russian equities," he says from the Copenhagen floor. "Profitability is going down fast, they can't get any funding and the ruble will most likely only weaken from here."
Finer China
The rise in equities in China continues unabated with insurance and banking riding the wave. China Life shares have gone up 20% in the space of a week and this trend "is accelerating," says Garnry.
Bonds fillip
New contract highs in bunds overnight were extended today to trade to152.62 after the ECB message remained on course for some kind of QE. "Consensus remains locked for some form of QE in January," says Boye.
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