Financial market research and analysis

The pound rallied to 1.3145 against the US dollar, as data showed the UK’s retail sales increased at a solid pace of 1.4% month-on-month in July versus the mere 0.1% that was expected.

The FTSE is struggling to avoid a short-term bearish reversal. A strong resistance is building pre-6900 level.

Energy and miners are leading gains in London on better oil and commodity prices, mostly due to a cheaper US dollar.

British American Tobacco (-0.79%), Imperial Brands (-0.36%), Legal & General (-0.90%), Mondi (+0.13%), Pearson (-1.30%), Reckitt Benckiser Group (-0.27%), Schroders(-0.73%) are among the biggest losers in the FTSE 100 in London, as they trade without entitlement to their latest dividend pay-out today.


Japan’s plunging exports and low US yields drove USDJPY below 100

The US dollar weakened across the board as the Federal Reserve (Fed) meeting minutes failed to deliver a hawkish hint regarding the outlook of the US monetary policy. In theory, September remains a live option, yet the market gives no more than a 22% chance for a rate hike to happen next month. Given the looming uncertainties at the heart of the FOMC, the odds for a Fed rate hike before the end of this year slipped below 50%.

Yen strength is once again on the headlines as Japanese exports plunged 14% on year to July. This is the tenth consecutive month of decline in Japanese exports. The stronger yen, combined to a global economic slowdown, should continue giving a headache to the Bank of Japan (BoJ). We hear rising echoes about the possibility of injecting the so-called ‘helicopter money’, although there is no official announcement in favour of such an aggressive alternative policy option.

The USDJPY tanked below the 100 level for a second session this week. As a cherry on top, the low US yields could not give a hand to stem the decline in USDJPY. A daily close below 100 dollars could encourage a deeper sell-off in the USDJPY and weigh on the JPY-crosses.