Morning Bid: Yen’s wild week has bears wary
2024.05.03 00:57
A look at the day ahead in European and global markets from Ankur Banerjee:
A more dovish-than-expected Federal Reserve meeting and an eye-watering $110 billion share buyback programme from Apple (NASDAQ:) have boosted risk sentiment ahead of the crucial U.S. nonfarm payrolls report later in the day.
But let’s be honest – yen remains the talk of the town and with Japan on holiday Friday and Monday, yen bears are nervously looking over their shoulders, wary of yet another round of intervention during quieter periods.
Traders suspect authorities stepped in on at least two days this week and data from the BOJ suggests officials may have spent almost $60 billion to pull the flailing yen away from a 34-year-low of 160.245 per dollar on Monday.
On Friday, the yen was around 153 per dollar and on course for its strongest weekly performance since December 2022.[FRX/]
Asian stocks surged to a 15-month high on Friday, led by tech stocks and the exuberant mood is set to continue in European hours, futures indicate.
Dollar’s weakness this week has provided other currencies a bit of breathing room but strategists polled by Reuters expect the U.S. currency to stand resolute and ultimately trader higher, especially if the Fed takes its time in cutting rates.
While the Fed this week left rates unchanged, it signalled that its next policy move would be to cut rates. Fed Chair Jerome Powell though noted that recent strong inflation readings suggest the first of these cuts could be a long time coming.
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In corporate news, focus will be on commodities bellwethers, after Reuters reported that Glencore (OTC:) is studying an approach for Anglo American (JO:), a development that could spark a bidding war for the 107-year old mining company. Anglo on Friday rejected a $39 billion all-stock proposal from the world’s No. 1 miner BHP.
Earnings season is well underway with banking firms Societe Generale (OTC:) and Credit Agricole (OTC:) due to report. Of the 136 companies on the pan-European to have reported earnings to date, 58.8% have exceeded analyst estimates, compared with a long term average of 54%, according to weekly LSEG data released on Tuesday.
Key developments that could influence markets on Friday:
Economic events: UK S&P PMI for April, euro zone unemployment rate for March
Earnings: Societe Generale, Daimler (OTC:), Credit Agricole
(By Ankur Banerjee. Editing by Sam Holmes)
