BOJ Intervenes + Tension Continues on Korean Peninsula

Lou Brien  |

Stocks were mostly quite weak in Asian trade. Hong Kong opened for the first time this week, it fell 3.9%, but the Nikkei was closed for a holiday and Shanghai is out all week. Australia was an exception today, it rose almost one percent. European indexes are on offer this morning, with the DAX and Footsie both off about two percent. US stock futures are down by just about two percent as I write.

*Currency markets are in flux this morning. The dollar/yen traded down to 111.00 overnight; both a continuation of the recent move and heightened tensions on the Korean peninsula. But this morning, in just a couple of minutes, the dollar/yen shot up a couple hundred pips, as high as 113.25, but the gain has retraced by half. Chatter was that it was the BoJ intervening to weaken the yen, or at least the bank calling around to check prices and put the fear of intervention into the market. FXers out of London say this is not the right time of day for intervention, but in any case a message has been sent. Dollar/yen 112.20 as I write.

The euro/swiss also popped suddenly this morning, weakening the swissie and more to the point preventing it from rallying further against the euro. There is nothing amiss with the time of day to suggest this was not the Swiss National Bank stepping into the market. Euro/swiss at 1.1013 as I write.

*The Riksbank goes more negative. Sweden’s central bank cut its key repo rate by fifteen basis points this morning, down to -0.50%; the cut was larger than forecast.

*By the way, the US 10 Year is at 1.56%, down about eleven basis points from yesterday afternoon; German Bund at 0.154%, which is 8.5 basis points lower on the day. WTI Crude Oil futures are at this moment down about a buck at $26.50; this is the March contract and it has never traded lower than it has today, low is $26.22.

*The January reading of Switzerland’s Consumer Price Index is -0.4% on the month and -1.3% on the year; both results as forecast.

*The weekly report on Initial Jobless Claims is due out at 7:30am CST, it is expected to be 280k.

*Fed boss Yellen is set to appear before the Senate Banking Committee today at 9:00am CST.

*The weekly report on inventories of Natural Gas is due out at 9:30am CST, it is expected to show a decline of 78 bcf.

*The Treasury plans to sell $15 billion 30 Year Bonds today; the auction results will be announced just after noon CST.

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