Daily Brief – Yen Intervention

Yen Intervention

As some readers will recall from last week, we queried Treasury Secretary Bessent’s strategy of capping US Government Long Bond Yields by buying bonds. Several weeks before that, Bessent played the part of reliable boyfriend to Japan by buying JPY to prop it up in the absence of Japan raising its interest rates. It is not disclosed how much it cost the US to participate in that Yen intervention, but we now know that it cost Japan USD 96 billion to take USD/JPY from 164 to 155 before it drifted back to 159. As for the Bank of Japan, the market is still only ascribing a 65% chance of Japan raising its rates this month.

EUR/USD 1.1600.

EU Inflation

As widely expected, the EU inflation number for August when it came out yesterday was well inflated by the 14% rise in energy prices from a year earlier. That means that the EU inflation rate rose from 2.9% to 3.3% and has placed additional pressure on the ECB to raise rates. As ever it’s a mixed picture with Lithuania, Cyprus and Bulgaria as well as big economy Spain all at 4.5%+. At the other end of the chart Estonia, Malta, Finland, and big economy France are all at 2.7% or below. And that’s what makes the lot of the Central Bank or in this case the ECB, a hard one.

EUR/GBP 0.8566.

AUD

Last week’s Australian inflation figure made it even more likely that the proactive Reserve Bank of Australia will raise interest rates. That has sent the Aussie Dollar to its highest level since May. Good news for those international investor customers of ours who are looking to cash in AUD assets and repatriate the proceeds to their home currency.

GBP/USD 1.3541.

EU Enlargement

Following Iceland’s resounding 58% No vote to joining the EU, where does that leave other candidate countries? Ukraine and Moldova continue to pursue in particular to address their own security concerns; Serbia, North Macedonia and Bosnia and Herzegovina see joining the EU as a path to political stability and economic prosperity; Turkey is the longest serving candidate country having applied in 2005. None of these countries are particularly close to joining the EU however due to many outstanding primarily human rights and economic gaps they need to close. Likely next acceding countries are Albania in 2028/9 and Montenegro 2029/30. While neither will move the dial for the EU economically, they do serve to keep the Enlargement agenda on track.

Brent Oil USD 92.75.

Every Breath You Take

This day in 2025 the court case between members of the rock band, the Police kicked off. The dispute centres around a 1977 verbal agreement between Sting and Stewart Copeland and Andy Summers which the latter duo remember clearly and Sting does not that includes all songs, words and digital as well as recorded output. USD800K has been put down as a start by Sting but his bandmates are after many multiples of that sum, and the case remains ongoing which presumably provides more than a frisson in the band.

Every breath you take
And every move you make
Every bond you break
Every step you take
I’ll be watching you

Every single day
And every word you say
Every game you play
Every night you stay
I’ll be watching you

Oh, can’t you see
You belong to me?
How my poor heart aches
With every step you take?

Every move you make
And every vow you break
Every smile you fake
Every claim you stake
I’ll be watching you

Since you’ve gone, I’ve been lost without a trace
I dream at night, I can only see your face
I look around, but it’s you I can’t replace
I feel so cold, and I long for your embrace
I keep crying, baby, baby please

Oh, can’t you see
You belong to me?
How my poor heart aches
With every step you take?

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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