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USD slightly higher as week comes to an end, BTC slumps

Summary:

  • US dollar tries to wipe off its losses but EURUSD nears a 1.25 handle anyway
  • Bank of Japan offers to buy unlimited amounts of 10Y JGB’s at 0.11%, USDJPY bounces back from a key support
  • Bitcoin plunges below $8500 on increased scrutiny in Japan

This Friday is the most important one in the whole week as the US jobs report will be released. Given the US dollar underperformance one may suspect that today’s reading could be a chance for the greenback, however, remember it did not benefit from yesterday’s ISM manufacturing even as it beat the consensus (a bit more on the NFP will be in a daily calendar in the next post). Looking through the FX space there is no doubt that the US currency is trying to end this week in better moods. At the time of writing the buck is the strongest currency nonetheless the most notable gains are seen in case of the Antipodean currencies (AUD and NZD) and against the Japanese yen. From Australia we just got PPI for the fourth quarter which increased from 1.6% yoy to 1.7% yoy. Seemingly, it could be conducive to the Australian currency as it may bode well for CPI, albeit amid a high level of competition there are some doubts whether domestic companies are able to pass increased input prices on customers, that’s the reason why the AUD is lower in early trading. Keep in mind that the Reserve Bank of Australia meets next week (the first meeting in the new year), hence AUD traders might witness higher volatility at the beginning to the new week.

link do file download linkAustralian PPI sped up in the last quarter of 2017. Source: Macrobond, XTB Research

In turn, the Japanese yen is falling more than 0.3% on the back of BoJ’s increased purchases of JGBs. The country’s central bank decided to buy more domestic bonds with maturity between 5 to 10 year (450 billion yen compared to 410 billion yen in the previous operation). What’s more, it offered to buy unlimited amounts of 10Y bonds at the fixed rate 0.11% in order to take the yield back to the target (near 0%). Today it was not a hard task to do as there were no too much sellers of bonds which could have pushed the yield well beyond 0.1%. Having said that, it could change before long if global yields continue rising and therefore it might constitute an important issue for the BoJ to adhere to policy of keeping the 10Y yield close to 0%.

link do file download linkThe USDJPY has already bounced off a support zone and it seems that it could continue climbing toward a 111 handle. This round level could determine the next move for the pair but if the ongoing revival of the greenback keeps its momentum, achieving of this line ought to be just a matter of time. Source: xStation5

Finally, let’s write something about Bitcoin as it’s slumped below a $8500 mark of late possibly on the reports from Japan. First of all, Japanese finance minister Aso said earlier today that the country’s regulator (Financial Services Agency or FSA) will conduct a spot inspection of the cryptocurrency exchange Coincheck today after hackers stole $530 million. Moreover, the FSA has reportedly asked all digital currency exchanges (31 not including Coincheck) to submit a report on risk management system. The Japan’s watchdog wants all virtual currency exchanges to step up their self-regulation while it calls on Coincheck to fix vulnerability of its computer system which is one of the major reasons why Coincheck has not been given an official approval yet.

link do file download linkBitcoin crashed well below $9000 probably on the reports coming from Japan. The closest support might be found at around $7900 before $5500. Source: xStation5

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