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Daily Pivots: (S1) 190.78; (P) 191.91; (R1) 192.72; More...

GBP/JPY's breach of 190.06 temporary low suggests that fall from 198.94 is resuming. Intraday bias is back on the downside for 188.07 support. Firm break there will argue that corrective pattern from 180.00 has finished too, and larger decline from 208.09 might be ready to resume. On the upside, above 193.01 resistance will delay the bearish case and turn intraday bias neutral again.

In the bigger picture, price actions from 208.09 are seen as a correction to whole rally from 123.94 (2020 low). The range of consolidation should be set between 38.2% retracement of 123.94 to 208.09 at 175.94 and 208.09. However, decisive break of 175.94 will argue that deeper correction is underway.

Yen's near term rebound gained momentum again today, supported by BOJ Governor Kazuo Ueda’s persistent messaging about a potential rate hike at next week’s policy meeting. Ueda’s repeated remarks are interpreted as laying the groundwork for markets to brace for a monetary policy shift. While recent polls as of last week indicated only a minority expectation of a January hike, the market are clearly undergoing recalibration. However, the current move in Yen against Dollar remains largely corrective, and a sustained reversal in the broader down trend trend would require further confirmation.

Meanwhile, Sterling continues to face mounting pressure after UK GDP data highlighted stagnation in economic activity. Monthly GDP rose just 0.1% in November, falling short of expectations. More importantly, growth over the three months to November was flat. The data has heightened fears of a contraction in Q4. Adding to Sterling’s challenges, new MPC member Alan Taylor struck a dovish tone in his first public speech, noting that while inflation is nearing its endgame, the weakening economy justifies a return to more “normal” interest rates.

For the week so far, Sterling remains the weakest performer among major currencies, with no signs of a sustainable rebound. Dollar is the second worst, as it continues to consolidate recent gains. . Yesterday’s softer-than-expected core CPI reading alleviated fears of a Fed policy reversal toward tightening, while a resurgence in risk appetite has kept the Dollar’s recovery momentum in check. Canadian Dollar rounds out the bottom three.

On the other hand, Australian Dollar, buoyed by risk-on sentiment. However, the Aussie’s inability to extend its rally following robust employment data raises questions about its underlying strength. Yen is the second-best performer, with the potential to advance further as expectations for a BoJ policy shift solidify. New Zealand Dollar rounds out the top three, while Euro and Swiss Franc are mixed in the middle.

Technically, the US stock markets are back into focus with yesterday's strong rebound. It might be too early to call for resumption of record run in S&P 500. But price actions from 6099.97 are still clearly corrective looking. Downside is also supported above 5669.67 resistance turned support. So, break of 6099.97 remains in favor at a later stage, probably after Trump's inauguration that clear out some uncertainties over his trade policies, as tariff could be raised just gradually to minimize the shocks to the economy.

UK GDP grows only 0.1% mom in Nov, with mixed sector performance

UK’s economy posted modest growth in November, with GDP increasing by 0.1% mom, but slightly missing market expectations of 0.2%. Nevertheless, this marked a positive turnaround from the -0.1% mom contraction in October.

Sectoral performance was mixed, with services, the largest contributor to the economy, inching up by 0.1% mom, while production fell by -0.4% mom. Construction activity, however, provided a brighter spot, rising 0.4% mom during the month.

Despite November’s modest gains, the broader economic picture remains subdued. Over the three months to November 2024, real GDP showed no growth compared to the three months to August. Services, which account for a significant portion of the UK’s output, stagnated over this period. Production output contracted by -0.7%, offsetting the 0.2% growth seen in construction.

BoJ’s Ueda reiterates rate hike debate for next week’s policy meeting

BoJ Governor Kazuo Ueda indicated today, for the second time this week, that the central bank will "debate whether to raise interest rates" at its upcoming January 23-24 policy meeting. This marks the second time in this week that Ueda has emphasized

Ueda’s comments come as BoJ prepares its new quarterly economic report, which will serve as the basis for its policy decision. While the Governor has not committed to a specific outcome, the repeated message signals that a rate hike is a plausible scenario, barring any significant market shocks tied to the January 20 inauguration of U.S. President-elect Donald Trump.

Market sentiment, nevertheless, remains divided on the timing of the anticipated hike. A recent poll conducted between January 8-15 shows that 59 out of 61 economists expect BoJ to raise rates to 0.50% by the end of March. Yet, only 20 foresee the move occurring at this month’s meeting.

Japan's PPI holds steady at 3.8% as import prices turn positive

Japan's PPI held steady at 3.8% yoy in December, meeting market expectations and maintaining the previous month’s pace. Key drivers included a sharp 31.8% yoy rise in agricultural goods prices, fueled by soaring rice costs.

Energy costs also contributed significantly, with electric power, gas, and water prices climbing 12.9% year-on-year. This uptick comes as the government phases out subsidies designed to mitigate rising utility and gasoline prices.

Yen-based import prices turned positive, rising 1.0% yoy after three months of declines. While modest, this reversal underscores the lingering effects of Yen depreciation, which was recorded at -0.1% mom.

Australia’s employment grows 56.3k in Dec, showing continuous resilience

Australia’s labor market displayed resilience in December as employment surged by 56.3k, significantly exceeding expectations of a 15.0k increase. Number of unemployed people also rose by 10.3k, contributing to a slight uptick in the unemployment rate from 3.9% to 4.0%, in line with forecasts.

Participation rate climbed to a record high of 67.1%, up from 67.0%, reflecting an expanding labor force. Additionally, employment-to-population ratio rose by 0.1 percentage point to a new peak of 64.5%, showcasing the labor market’s capacity to absorb more workers. Monthly hours worked increased by 0.5% mom, equivalent to 10 million additional hours.

This data supports the view that the labor market’s earlier signs of easing have stabilized in the second half of 2024. Robust employment growth, consistent levels of average hours worked, and unchanged or lower levels of labor underutilization compared to a year ago affirm the ongoing strength of the job market.

GBP/JPY Daily Outlook

Daily Pivots: (S1) 190.78; (P) 191.91; (R1) 192.72; More...

GBP/JPY's breach of 190.06 temporary low suggests that fall from 198.94 is resuming. Intraday bias is back on the downside for 188.07 support. Firm break there will argue that corrective pattern from 180.00 has finished too, and larger decline from 208.09 might be ready to resume. On the upside, above 193.01 resistance will delay the bearish case and turn intraday bias neutral again.

In the bigger picture, price actions from 208.09 are seen as a correction to whole rally from 123.94 (2020 low). The range of consolidation should be set between 38.2% retracement of 123.94 to 208.09 at 175.94 and 208.09. However, decisive break of 175.94 will argue that deeper correction is underway.

UK’s economy posted modest growth in November, with GDP increasing by 0.1% mom, but slightly missing market expectations of 0.2%. Nevertheless, this marked a positive turnaround from the -0.1% mom contraction in October.

Sectoral performance was mixed, with services, the largest contributor to the economy, inching up by 0.1% mom, while production fell by -0.4% mom. Construction activity, however, provided a brighter spot, rising 0.4% mom during the month.

Despite November’s modest gains, the broader economic picture remains subdued. Over the three months to November 2024, real GDP showed no growth compared to the three months to August. Services, which account for a significant portion of the UK’s output, stagnated over this period. Production output contracted by -0.7%, offsetting the 0.2% growth seen in construction.

Full UK monthly GDP release here.

Australia’s labor market displayed resilience in December as employment surged by 56.3k, significantly exceeding expectations of a 15.0k increase. Number of unemployed people also rose by 10.3k, contributing to a slight uptick in the unemployment rate from 3.9% to 4.0%, in line with forecasts.

Participation rate climbed to a record high of 67.1%, up from 67.0%, reflecting an expanding labor force. Additionally, employment-to-population ratio rose by 0.1 percentage point to a new peak of 64.5%, showcasing the labor market’s capacity to absorb more workers. Monthly hours worked increased by 0.5% mom, equivalent to 10 million additional hours.

This data supports the view that the labor market’s earlier signs of easing have stabilized in the second half of 2024. Robust employment growth, consistent levels of average hours worked, and unchanged or lower levels of labor underutilization compared to a year ago affirm the ongoing strength of the job market.

Full Australia employment release here.

BoJ Governor Kazuo Ueda indicated today, for the second time this week, that the central bank will "debate whether to raise interest rates" at its upcoming January 23-24 policy meeting. This marks the second time in this week that Ueda has emphasized

Ueda’s comments come as BoJ prepares its new quarterly economic report, which will serve as the basis for its policy decision. While the Governor has not committed to a specific outcome, the repeated message signals that a rate hike is a plausible scenario, barring any significant market shocks tied to the January 20 inauguration of U.S. President-elect Donald Trump.

Market sentiment, nevertheless, remains divided on the timing of the anticipated hike. A recent poll conducted between January 8-15 shows that 59 out of 61 economists expect BoJ to raise rates to 0.50% by the end of March. Yet, only 20 foresee the move occurring at this month’s meeting.

Japan's PPI held steady at 3.8% yoy in December, meeting market expectations and maintaining the previous month’s pace. Key drivers included a sharp 31.8% yoy rise in agricultural goods prices, fueled by soaring rice costs.

Energy costs also contributed significantly, with electric power, gas, and water prices climbing 12.9% year-on-year. This uptick comes as the government phases out subsidies designed to mitigate rising utility and gasoline prices.

Yen-based import prices turned positive, rising 1.0% yoy after three months of declines. While modest, this reversal underscores the lingering effects of Yen depreciation, which was recorded at -0.1% mom.

Full Japan PPI release here.

Following a nervous session last night, the EUR/USD pair is trading near 1.0285 on Thursday morning. The market is now stabilising.

Key developments influencing EUR/USD

US inflation data showed moderate growth, aligning with expectations. As forecast, the Consumer Price Index (CPI) rose by 0.4% m/m in December, maintaining an annualised rate of 2.9% y/y. Core CPI, excluding volatile goods, offered a slight surprise with a ‘cooling’ effect. It increased by 0.2% m/m (3.2% y/y), below the forecasted 0.3% m/m (3.3% y/y).

US Treasury yields declined, negatively impacting the USD. However, the currency market’s reaction remained subdued.

The release of inflation statistics prompted investors to modestly revise their expectations for Federal Reserve interest rate cuts in 2025. Lending costs are now expected to drop by an average of 37 basis points throughout the year.

The USD demonstrated resilience in January and performed better than in December. If this trend continues, the current week will mark the fourth consecutive week of USD strengthening.

In contrast, European statistics provided little support for the euro. Industrial production in the Eurozone rose by 0.2% m/m in November, following stagnation in October. However, year-on-year figures revealed a deeper contraction, with production falling by 1.9%.

Investors now await key US economic data, including December retail sales and weekly jobless claims, which could further influence the pair.

Technical analysis of EUR/USD

On the H4 chart, EUR/USD completed a corrective wave to 1.0350 before forming a new downward impulse to 1.0258. The current outlook suggests the potential development of a new downward wave targeting 1.0160. After reaching this level, a corrective move towards 1.0250 is likely, with a possible further decline to 1.0050. This scenario is supported by the MACD indicator, with its signal line below zero and trending downwards, indicating the likelihood of renewed lows.

On the H1 chart, the pair formed a downward impulse to 1.0258, with a correction expected to target 1.0300. Once this level is reached, the downward wave may resume, aiming for 1.0210 and potentially extending to 1.0160. The Stochastic oscillator supports this outlook, with its signal line below the 50 mark and heading towards 20, suggesting continued downward momentum.

Conclusion

EUR/USD remains under pressure as US inflation data bolstered the dollar’s resilience. While technical indicators point to further downside potential, the pair’s movements will largely depend on upcoming US retail sales and jobless claims data, as well as the overall strength of the USD. On the euro’s side, weak industrial production data highlights ongoing challenges in the eurozone, adding further weight to the bearish outlook.

Markets

US December CPI numbers avoided a feared acceleration and triggered a cross-asset relief move. The big reaction was more about repositioning rather than the actual data. Headline CPI (0.4% M/M, 2.9% Y/Y) was in line with consensus while core CPI (0.2% M/M, 3.2% Y/Y) was only just below expectations. US yields lost 9.6 bps (30-yr) to 15.2 bps (7-yr) with the belly of the curve outperforming the wings. US money markets moved back to two rather than one more 25 bps Fed rate cut this year, with a first one discounted by June. NY Fed Williams, Richmond Fed Barkin and Chicago Fed Goolsbee all welcomed the monthly price report, but added that this doesn’t alter the story line set out back in December. It will take more time to bring inflation on a sustainable path to 2%, meaning restrictive policies are still necessary. The goldilocks combo of (strong) payrolls, (slightly) lower CPI, lower real rates and strong Q4 (US banks) earnings propelled US stock markets 1.65% (Dow) to 2.45% (Nasdaq) higher. US retail sales can today extend those positive market vibes. The US dollar was the odd one out, holding strong despite an initial move lower. EUR/USD closed at 1.0289 from 1.0308 and with an intraday top at 1.0354. Two elements are at play. First, European bond yields followed the US move with EU swap rates shedding up to 12 bps (belly). Second, event risk looms large with US markets enjoying a long weekend (MLK Day on Monday Jan 20) during which president-elect Trump will be inaugurated. The Japanese yen continues outperforming on more talk that the BoJ will effectively hike policy rates next week. USD/JPY approached 155 for the first time since mid-December.

Bank of England rate-setter Alan Taylor stroke a dovish tone in his first public speech since joining the central bank in September of last year. He sides with the more benign inflation cases made by the BoE in which price pressures fade relatively quickly. Under this view, the economy might face adverse demand pressures potentially on many fronts while supply is less perturbed. The BoE’s reaction function should then be one of lowering policy rates rather quickly to neutral, which Taylor estimates at around 2.75% in this scenario: “we are in the last half mile on inflation, but with the economy weakening it’s time to get interest rates back toward normal to sustain a soft landing”. Accelerated rate cuts means perhaps 125 bps to 150 bps in the coming year. This view contrasts sharply with UK money markets currently discounting a cumulative 50 bps of rate cuts by the end of the year. A first one could be implemented as soon as February given the 6-3 split vote in December and in the wake of yesterday’s below-consensus inflation numbers. BoE Taylor was one of the dissenters at that December policy meeting together with his colleagues Ramsden and Dhingra. They voted in favour of a 25 bps rate cut rather than sticking with unchanged policy rates. UK Gilts yesterday outperformed with UK yields losing 14 to 16 bps across the curve. EUR/GBP tested first resistance at 0.8448, but a break didn’t happen, at least not for now. GBP/USD holds near the sell-off lows (1.22) with support lingering around 1.2037 (Oct 2023 low). We stick to our bearish view against sterling.

News & Views

Canada set up a draft list of some C$150 bn of US-manufactured products eligible for import tariffs in case President-elect Trump decides to impose levies on Canadian goods, Bloomberg reported citing an official familiar to the matter. The exact items on this initial list are not disclosed yet and it would only come into force if the next US administration moves first. But its scope is in any case much bigger than during Trump’s previous term, when Canada slapped tariffs on some C$17bn of US exports to the country. Canadian imports from the US in the 12 months to November amounted to C$487bn, meaning the draft list covers nearly a third of the products’ value.

The central bank of South Korea unexpectedly kept its policy rate unchanged at 3% this morning in a 6-1 vote. Governor Rhee said that based on growth alone, the central bank would have cut rates. Inflation at 1.9% is also close to the BoK’s 2% target. All members except Rhee kept the door open for reductions in the next couple of months. But in considering all variables including financial stability risks the BoK today decided otherwise. Rhee was referring to the dramatic slide in the South Korean currency to the lowest level against since 2009 in the wake of president Yoon Suk Yeal’s failed martial law attempt early December. The economic fallout of the political crisis is probably bigger than expected, the governor said, and downside risks to the 2025 outlook have increased. Today’s status quo was also underpinned by uncertainty surrounding Trump’s first policy measures after his inauguration next week. USD/KRW trades little changed around 1456.7. The multi-year high end-December stood at 1486.85.

Yesterday offered an almost ideal news flow for global investors. First, the British inflation came in softer than expected. The most-watched services inflation eased from 5% to 4.4% last month, to the lowest since March 2022, and led to a much-needed relief in the UK gilt markets. The 10-year gilt yield gapped lower at the start of the session and eased about 20bp compared to the day before, Cable rebounded on the bond relief and FTSE 100 rallied more than 1% on expectation that the Bank of England (BoE) could cut rates twice this year.

Then, the US took over and announced a set of softer-than-expected inflation figures, as well Headline inflation in the US rebounded from 2.7% to 2.9% as expected in December, but core inflation eased unexpectedly from 3.3% to 3.2%. The cherry on top: the Empire State Manufacturing Index unexpectedly plunged in January, offering some relief to the Federal Reserve (Fed) doves which spent the first weeks of the new year watching the dream of rate cuts sailing away. Yesterday’s data brought rate cut expectations back on the table. The US 2-year yield plunged more than 10bp to below 4.30% and the US 10-year yield dived up to 15bp to 4.65%. Activity on Fed funds futures now hints that the Fed’s next rate cut could arrive in May -and not June - and that’s a blast for the equity markets which also benefited from a set of strong earnings from the big US banks. Together, the four big banks that released earnings yesterday – JP Morgan, Wells Fargo, GS, and Citigroup – printed more than $100bn profit last year, the second highest yearly profit ever. JP Morgan alone topped a $50bn annual profit mark thanks to exceptional jump in profits boosted by election volatility in Q4, Wells Fargo announced a 12% cut in expenses, Goldman’s Q4 profit doubled compared to a year ago, while Citigroup gained investors’ heart yesterday with the announcement of a $20bn stock buyback. All in all, Invesco’s bank ETF jumped more than 4% yesterday. More big banks will be releasing earnings today.

Zooming out, the S&P500 gained more than 1.80% on the back of softer-than-expected inflation data and better-than-expected bank earnings. The Magnificent 7 rallied more than 3.50% despite discouraging news of more export curbs for chip companies, the Stoxx 600 index traded past its 200-DMA, crude oil rallied above the $80pb despite the ceasefire agreement in Gaza and the US dollar gave back gains.

But the USD is stronger before the December retail sales data – which could confirm the strength of US consumer spending and counter a part of yesterday’s inflation optimism. Don’t forget that the core inflation in the US is still above the 3% mark - well above the Fed’s 2% target and hardly coming lower - and the trade war between the US and China is about to spread to the rest of the world. Even though Trump’s new team is aiming to raise tariffs gradually, a 10% universal tariff and a 60% tariff for China would amount in an average tariff of 17% according to Barclays and could only raise pressure on consumer prices in the US.
Some bad news

German economy shrank for the second consecutive year for the first time since the beginning of 2000s and given the actual state of things, Germany is not expected to do much better this year. The latter weakness is maintaining the hope that the European Central Bank (ECB) will give an ample support to the weakening European economies this year and helps explaining why the DAX index hit a fresh record high yesterday despite the bad news, but the EURUSD is having hard time maintaining its advance above the 1.03 mark. The fact that a broadly softer US dollar on soft inflation couldn’t help to reverse losses confirms that the bearish tide is relatively strong. The EURGBP hit the high mark of the downtrending channel at 0.8463 yesterday, however, as sterling remains under a stronger downside pressure due to British debt headaches.

Sterling bulls and bears are still struggling to take the lead around the 1.22 against the US dollar. The expectations that the BoE could cut its rates twice this year gives relief to the gilt market, hence decreases the need for more concessions on spending plans and improves UK’s growth outlook. But that’s a meagre improvement, mind you: this morning's GDP update came in lower than expected for November, keeping the outlook for sterling firmly in the bearish camp.

Elsewhere, the USDJPY took a decent dive yesterday and tipped a toe below the 156 level on the back of a broadly softer US dollar and a strong rebound in the Japanese yen on raising expectation that the Bank of Japan (BoJ) could announce a rate hike as early as next week. If the BoJ hikes next week, the USDJPY could return below its 200-DMA sustainably and test the major 38.2% Fibonacci support on the September to January rebound, near 151.15 level. A slide below that level would indicate a medium-term bearish reversal for the pair.

In energy, the fact that crude oil is now trading near the $80pb raises a few questions. The latest rally was led by geopolitical factors and brought the IEA to revise its surplus forecast lower this year. The prospects of rate cuts are also supportive of demand outlook, but for now, the gains are supported by the supply-side news, hence remain vulnerable. I expect to see increased incentive to sell the top near the $80pb level and expect support near the $75/77pb range.

In focus today

From the US, initial jobless claims and retail sales will provide markets with evidence of the health of US consumers and unemployment. For initial jobless claims consensus expects an increase of 210k (prior: 201k) and for December retail sales consensus expects 0.6% m/m (prior: 0.7%).

The ECB will release the records of its latest meeting from 11-12 December at 13.30 CET.
Economic and market news

What happened overnight

Israel-Gaza ceasefire: Gaza ceasefire has been announced after 15 months of conflict. Negotiations have led to a structured agreement to bring an end to the war in Gaza. The ceasefire is set to commence on 19 January. The agreement outlines an initial six-week ceasefire period, including the withdrawal of Israeli forces from the Gaza strip, the release of hostages, and the return of displaced Palestinians.

Trump's promises of ceasefire in Ukraine on his first day in office is under pressure. Trump's advisors now acknowledge that resolving the Ukraine conflict will take months or even longer, providing a sharp reality check on Trump's major foreign policy promise. The promise of facilitating a deal within 24 hours was always unrealistic, and it appears that the complexity of the conflict is now being recognized.
What happened yesterday

In the US, December CPI were close to expectations, with details continuing to show easing underlying inflation. Headline inflation was +0.39% m/m s.a. (cons: +0.3%), while core inflation slowed to +0.23% m/m s.a. (cons: +0.2%), both close to consensus. The rise in headline inflation was driven by energy prices, while core inflation details were encouraging. Shelter inflation slowed after November's hotel price surge, and both rental and owner-occupied housing inflation are cooling. Non-housing services inflation slightly increased. Core goods and health care prices also eased core inflation. Despite market concerns about rising inflation, the data shows nothing to support these fears. Consequently, bond yields dropped, and EUR/USD rose after the release.

In the UK, inflation for December surprised significantly to the downside with headline at 2.5% y/y (cons: 2.6%, prior: 2.6%), core at 3.2% y/y (cons: 3.4%, prior: 3.5%) and services at 4.4% y/y (cons: 4.8%, prior: 5.0%). While the downside surprise was broad-based, air fares drove a large part of the downside surprise. Services, which is by far the most important component for the Bank of England, came in lower than the BoE's expectation of 4.7%. Likewise, our measure of core services, which excludes volatile components such as air fares, continues to decline and shows easing momentum, which is good news for the BoE. With the lower-than-expected US inflation data out later in the afternoon this offered some much-needed relief to UK markets after the recent sell-off.

In Germany, GDP for 2024 contracted by 0.2% y/y (prior: -0.3%), highlighting one of the country's most prolonged economic crises in decades, just six weeks ahead of a crucial snap election. The very early estimate of GDP growth in Q4 2024 was -0.1% q/q, though this estimate carries higher uncertainty due to incomplete data. Nonetheless, the decline aligns with our growth expectations and is not as severe as feared, given the negative economic sentiment.

In Sweden, final December core inflation, CPIF excl. energy, was 0.1 p.p below the preliminary number, at +0.3% m/m and 2.0% y/y, a slight downside surprise. This may widen the spreads to Riksbank's forecast going into January. Also, Origo Group is the new vendor managing the collection of inflation expectations from January 2025 and onwards, previously this was done by Prospera (Kantar). The shift might cause disruptions but there are no strong reasons to assume so. Hence, we expect only marginal adjustments relative to the December survey which showed expectations close to or below the inflation target.

Equities: Global equities rose yesterday, with optimism boosted by a lower-than-expected core CPI number from the US. Consequently, we observed indices closing at or around daily highs, and for several indices, it was the best day since the post-US election surge. Not surprisingly, cyclicals, especially US cyclicals, led the advances. However, the magnitude of the outperformance of cyclicals was somewhat surprising even to us. This, if anything, underscores our view that cyclicals will continue to outperform as long as the macroeconomic environment remains positive, despite trading at the highest premium to defensives in over 15 years. In the US yesterday, the Dow increased by 1.7%, the S&P 500 by 1.8%, the Nasdaq by 2.5%, and the Russell 2000 by 2.0%. Asian markets are catching up this morning, reflecting the strong performance in the Western world yesterday. Meanwhile, US and European futures are more mixed this morning.

FI: US rates rallied on the back of the US CPI release yesterday coming in less hot than expected by consensus. The 5-10y area led the way with a 15bp rally, with the wings down "only" by 10bp. 10y German Bunds ended 6bp lower, with ECB pricing now at -96bp. Also, Gilts rallied following the UK CPI release in the morning.

FX: Yesterday's session was dominated by first the relief in UK markets and later the US CPI induced rally in risk appetite which aided risk-sensitive currencies such as AUD and NOK while the drop in global yields sent the JPY soaring. While the USD initially weakened, we have since seen a slight comeback which has also contributed to a rebound in USD/JPY from below 155.50 to now 160.00. While EUR/GBP dropped in yesterday's session the cross is still trading north of 0.84.