Forex News from the European Trading Session – August 28, 2020
- JPY leads, USD is late on the day
- European mixed equities; E-minis up to ~ 0.3%
- US 10-year yields down 0.6 bps to 0.745%
- Gold up 1.7% to $ 1,962.00
- WTI flat at $ 43.05
- Bitcoin up 1.6% to $ 11,450
The big story of the session was the surprise resignation of Shinzo Abe as Japanese Prime Minister. Until then, he was expected to speak to the public about his health concerns and continue his work.
But today marks the end of an era of Japanese politics as Abe resigns since assuming the post of prime minister – the longest-serving in Japan – in 2006.
The news sparked a risk rotation in Japanese markets and hedged a fire under the yen as the currency turned early losses into stronger gains over the session.
USD / JPY fell from 106.70 to 106.10 initially, but a back-to-back selling wave – aided by dollar weakness – sees the pair drop to 105.30 currently.
Stocks traded more mixed overall, but Treasury yields saw a reversal as 10-year yields rose 3bp to 0.786% earlier, before falling to 0.745% now.
Nor is the dollar’s woes helped by the likely month-end rebalancing flows as the greenback is beaten across the board.
EUR / USD rose from 1.1860 to 1.1920 while GBP / USD hit new eight-month highs in a surge above 1.3300. USD / CAD continues to descend to new seven-month lows near 1.3050, while AUD / USD is at its highest since December 2018 in a push above 0.7300.
The market is still largely digesting yesterday’s Fed event and so far the verdict appears to be a clear decline in the dollar as it continues to languish with little technical support to help the currency at this time.