A Traders’ Weekly Playbook: The JPY at work

Chris Weston
Head of Research
27 Apr 2024
We closed out what was a strong week for equity indices, and for the first time in three week’s we went into the weekend not overly concerned about the prospect of geopolitical headlines raising the prospect of gapping risk (for the Monday open).

The equity index that stands out above all others is the HK50, which gained 8.8% (the best week since Nov 2011), with the HK cash market closing higher for five straight days – the fact we’ve seen 20 straight days of inflows into HK equity funds from the China mainland is clearly helping. 


Following some way behind, the NAS100 gained an impressive 4.2%, and I expect further attention on this index with Apple and Amazon due out with numbers this week. I’d be paying close attention to Amazon given the options market implies a 7% move on the day of earnings, and this is a core holding in almost every investment manager's portfolio. Another case study where the numbers and guidance needs to deliver and deliver in spades, or we could see disappointment. 

We’ve heard from nearly half of S&P500 companies this earnings season and so far, 80% have beaten EPS expectations by an average of 9%, while 56% have beaten on sales. You can say that has been supportive of risk and this week we get a further 27% of the S&P500 market cap reporting. 

In FX circles, the JPY continues to get the lion's share of attention with the currency undergoing a blanket fire sale on the week – Japanese authorities may say they don’t target levels per se, but they do pay close attention to the trend and the rate of change and at current levels suggest they have to act soon or risk facing a credibility crisis. The FX market is almost taking them on like the bond vigilantes of old, with many looking to hedge out short JPY positions through USDJPY puts. We’ll see, but while USDJPY gets a close inspection, moves in AUDJPY were particularly impressive, with the pair having its best weekly gain since June 2020. 

Being short JPY here comes with inherent risk – but for those with no position I can imagine hedge funds setting algo’s with limit orders 400-500 pips under spot to capture an intervention move. Naturally, in the belief that any sharp dip will come back quickly.

On the data front, the Fed meeting takes centre stage on Wednesday, with Jay Powell likely to be pressed hard on the possibility of hiking. We also get the US ECI report, and nonfarm payrolls, where the prospect of further evidence of a hot labour market should be on display. 

EU CPI may get some attention and should reinforce the policy divergence trade that is playing out between ECB and Fed interest rate pricing. Staying on the subject of interest rates, locally the debate on the RBA’s next move heats up with Aussie interest rate futures seeing the next move skewed towards a hike. With 3 of the 4 ASX200 big banks reporting over the next two weeks, commentary from the respective CEOs on lending trends and volumes could move the dial. It certainly suggests staying long AUDNZD. 

Good luck to all.

The key event risks for traders to navigate in the week ahead:


  • Spain CPI (17:00 AEST) – 1% m/m and 3.4% y/y (from 3.2%)
  • German CPI (22:00 AEST) – 0.6% m/m & 2.3% y/y
  • US Treasury announce its financing estimates for Q2 

Central bank speeches – ECB chief economist Lane speaks (21:15 AEST)


  • China manufacturing & services PMI (11:30 AEST) – 50.3 (from 50.8) & 52.2 (53.0)
  • Australia retail sales (11:30 AEST) – 0.2% (0.3%) – with Australia interest rate futures pricing an even’s chance of a 25bp hike by September, the retail sales report could influence the AUD and AUS200 more than usual.
  • France CPI (16:45 AEST) – 0.5% m/m and 2.2% y/y
  • EU CPI (19:00 AEST) – the consensus is for headline EU CPI to be unchanged at 2.4%, while core CPI is eyed lower at 2.6% (from 2.9%), which would be the lowest level since Feb 2022. One for the radar, and notably if we see a lower-than-expected outcome. 
  • EU GDP (19:00 AEST) – the market looks for 0.2% y/y (from 0.1%) – It seems unlikely that the GDP print proves to be a volatility event for the EUR. 
  • US Employment Cost Index (ECI - 22:30 AEST) – the consensus has the ECI increasing to 1% (from 0.9%) – given the focus on inflation, the ECI has the scope to move markets but may need a print above 1.2% to do so. 
  • Columbia interest rate decision (Wed 04:00 AEST) – the consensus is for a 50bp cut to 11.75% (from 12.25%)


  • US - Before market – 3M, Coca-Cola, McDonald's
  • US - After-market – Amazon (implied move -/+ 7.5%), AMD, Starbucks
  • Europe – Volkswagen, Mercedes-Benz, HSBC, Banco Santander



  • NZ unemployment rate and employment change (08:45 AEST) – 4.3% (4%) and 1.6% Y/Y 
  • US Treasury Quarterly Refunding Announcement (QRA) – the QRA has been the source of lasting trends in the US Treasury market, but in this report the consensus sees no significant changes to the previously announced ($202b) Treasury borrowing requirements for Q2. A decent upscaling though of the USTs borrowing requirements would surprise and likely result in higher US bond yields and result in a stronger USD.  
  • US ISM Manufacturing (Thursday 00:00 AEST) – 50.1 (50.3)
  • US Job Openings Report (JOLTS – Thursday 00:00 AEST) – 8.68m job openings (from 8.75m)
  • FOMC meeting & Chair Jay Powell Press Conference (Thursday 04:00 AEST and 04:30 AEST) – given the Q1 core PCE price index inflation read of 3.7% annualised (from 2% in Q423) many will be looking for a slight hawkish shift in the FOMC statement – However, I am not sure it comes, and we are more likely to see Chair Powell’s press conference the stage for market volatility. Look for further colour on a start date for the Fed to ease the pace of Quantitative Tightening (currently $60b per month) and any view that the risks on policy (cuts or hikes) changes are more balanced - where the press will probe Powell on the possibility of hikes in the months ahead. 


  • Before market – Pfizer, Mastercard
  • After-market – Qualcomm


  • Swiss CPI (16:30 AEST) – headline CPI 1.1% y/y and core CPI 0.9% y/y (1%). Another weak Swiss CPI print will cement calls for another 25bp cut by the SNB at the next meeting on 20 June. I like USDCHF higher and would look at longs on a breakout and close above 0.9150.


  • Before market – ConocoPhillips
  • After-market – Apple (implied move 3.7%), Coinbase
  • Europe - Novo Nordisk, Shell, ING Group 
  • Australia - NAB


  • Norges (Norway) Bank meeting (18:00 AEST) – the consensus is that the Norges Bank leave rates on hold at 4.5%.
  • US nonfarm payrolls (22:30 AEST) – the consensus is 250k jobs (the range of estimates sits between 280k to 190k), with 3- and 6-month averages at 276k and 245k respectively. The unemployment rate is expected to remain at 3.8%, with average hourly earnings at 4% (from 4.1%). 
  • US ISM services (Sat 00:00 AEST) – 52.0 (51.4)


  • Europe – Société Generale & Credit Agricole 
  • Australia – Macquarie Bank 

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