Morning Brief – Japanese Yen

Humphrey Percy
Chairman and Founder
Fri 17 May 2024

Japanese Yen

As soon as a rash of market analysts concluded yesterday that the Yen was a basket case and that the Bank of Japan were wasting their money intervening to prop up the Yen, the Japanese Yen strengthened markedly on the back of US data admittedly rather than positive Japan data, but it certainly will have inflicted some wounds on trading desks with short Yen positions. Just two sessions ago with USD/JPY at 156.60 it was all obvious until it wasn’t. Of course this is most definitely not the end of the story for Yen weakness but it demonstrates graphically how market watchers can read the tea leaves correctly for one currency only to get it horribly wrong due to weakness in another currency on the other side of the world. It were ever thus!

USD/JPY 154.70.

Bank of England

In the past 15 years the Bank of England has as is generally appreciated, bought a colossal amount of government bonds to create the easy money conditions that rescued markets in the wake of the Global Financial Crisis and more particularly the Great British Crisis. Now the game is about QT or Quantitative Tightening i.e. when the BoE sells those government bonds back to the market. Taking with one hand but simultaneously giving with the other, yesterday the Bank of England allotted a whacking GBP 14.4 billion of one week liquidity to keep money market rates at or close to the official Bank Rate of 5.25%. The reason for institutions to buy those government bonds (10 year yields 4.17%)  is because they will show handsome gains when interest rates are cut this summer; in the meantime similar to pay day loans, the BoE is tiding those buyers over with dollops of short term cash at high interest rates.

GBP/USD 1.2665.


With no sense of schadenfreude or the enjoyment in others’ misfortune, it is nevertheless heartwarming to see that those happy chappies at the IMF are pointing their fingers at Germany for a change. This time it is not a story about lack of productivity and teeth sucking about the German economic miracle coming to an end. The IMF simply could not say that with Q4 2023 GDP having come in at -0.5 and now Q1 2024 up to +0.2. Instead the IMF criticised Germany for an aging population, underinvestment and too much red tape.

EUR/USD 1.0871.


In a release that will have no-one who has tried to contact His Majesty’s Revenue and Customs, the National Audit Office has issued its report card for HMRC and its not pretty. Apart from failing to deliver on customer service and responding to telephone calls and letters, the number that catches the eye is 798. The NAO has measured and totted up and has concluded that between 2022 and 2023 HMRC kept customers on hold while waiting for their calls to be answered for a cumulative 798 YEARS! Your call is important to us etc….

GBP/EUR 1.1654.

Fool to Cry

Congratulations and Happy Birthday to Andrea Corr of Irish family pop band The Corrs who turns 50 today. This song from their album Blue. It’s the way you tell ‘em….

You’re irresistible, you’re mine

Don’t want you for the weekend
Don’t want you for a day
Don’t need a love divided
Don’t want to feel this way

See I want you to need me (the way I need you)
Just like I need you (the way I see you)
And I want you to see me like no one before

You’re irresistible, you’re natural and physical
It’s indefinable, magical, illogical
So make-you-mineable, you’re mine

So can’t you see I’m tortured?
Oh, can’t you hear my pain?
If you just let me show you (show you)
I’ll be your summer rain

Then you’ll feel that you want me (the way I’m feeling)
Just like I want you (the way I want you)
And you know nothing’s better
It’s like nothing before

You’re irresistible, you’re natural and physical

Have a Great Weekend!

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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