China and Japan step up defences

Market reports
Thanim Islam
  • USD weakens on united front from China and Japan
  • UK job numbers in focus for GBP tomorrow
  • US inflation on Wednesday and ECB meeting Thursday


Markets were fairly subdued on Friday, with stocks finishing fairly unchanged and we saw similar price action in the FX space. This morning though we have seen USD weaken after the People's Bank of China sent a warning to speculators to stay clear of destabilising the CNY, and the Bank of Japan hinted the possibility of ending its negative rate policy.


Market rates

* Daily move - against G10 rates at 7:30am, 11.09.23

** Indicative rates - interbank rates at 7:30am, 11.09.23

Data points


  • GBP - BoE Pill

Our thoughts

A quiet day in the markets today with only BoE member Huw Pill in focus. His comments last week caused markets to dial back future rate rise expectations from the BoE, which also weakened GBP. Unless he adds anything for material in his comments today then the implications on GBP may be negligible. Tuesday and Wednesday we would expect some volatility on GBP, with the release of job numbers and growth numbers.

As already mentioned, USD has started the week on the backfoot, but should we see inflation data on Wednesday suggesting that inflation is remaining sticky then we could see the currency continues its positive trend.

For the EUR, all eyes will be on the ECB rate decision on Thursday, where markets are currently thinking it's too close to call whether we’ll see rates on hold this month, or we see a 0.25% rate hike. Anything to suggest that the ECB is done with hiking rates, then we would expect the EUR to weaken further.

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