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The yen is surging and stocks are slipping. Here are some of things people in markets are talking about today.
The Japanese yen strengthened to 108.20 to the dollar by 10:38 a.m. London time, climbing to its highest level since before Bank of Japan Governor Haruhiko Kuroda announced a surprise expansion of its quantitative easing (QE) program in October 2014. JPMorgan Chase & Co.’s Tohru Sasaki, a former Bank of Japan official who predicted the currency rally, says the government will be reluctant to intervene to stem the yen's rise as such a move would probably prove to be futile. Meanwhile, there are rising concerns that the Bank of Japan may already be reaching the technical limits of QE as it runs out of government bonds to buy.
The MSCI Asia Pacific Index added 0.9 percent to reach 125.72 overnight as stocks in Asia recovered, with the Shanghai Composite Index bucking the trend and closing 1.4 percent lower. In Europe, the Stoxx 600 Index gave up early-session gains to trade 0.5 percent lower at 10:40 a.m. London time, with banks leading the losses. S&P 500 futures are 0.5 percent lower.
Fed rate hike odds fall
Yesterday's Federal Reserve minutes confirmed a cautious outlook for U.S. interest rates, with concerns about global growth now seen as a barrier to the the next hike. Market-implied odds of a rate hike by the June Fed meeting are now below 20 percent, while the chances of any interest rate increase at all in 2016 are only barely above 50 percent. The Dollar Spot Index is 0.2 percent lower at 94.353 at 11:05 a.m. London time.
ECB could boost stimulus again
European Central Bank officials have underlined their readiness to ease monetary policy even further, with President Mario Draghi writing in the forward to the bank's annual report today that they won’t “surrender” to excessively low price growth. Chief Economist Peter Praet, speaking at a conference in Frankfurt, said that further stimulus would be provided if necessary. The euro fell 0.2 percent against the dollar following Praet's comments. In other central bank news, this morning the People's Bank of China reported that China's foreign currency reserves unexpectedly increased for the first time in five months, rising by $10.3 billion to $3.21 trillion in March.
Oil, industrial metals slip
Oil futures dropped 0.5 percent to $37.57 a barrel at 11:05 a.m. London time, reversing earlier gains of as much as 1.5 percent after rising 5.2 percent yesterday. Copper fell to its lowest level in more than a month, dropping as much as 1.3 percent on the London Metal exchange. Zinc, lead and nickel also fell. Gold is higher.
What we've been reading
This is what's caught our eye over the last 24 hours.
- The $5-trillion, 300 year-old London gold market is set for an overhaul.
- So just how much of an inflation overshoot will Janet Yellen tolerate?
- London luxury apartment slump triggers 20 percent bulk discount.
- Hedge funds with billions at stake face pirate rules in Iceland.
- Bad loans will keep troubling China, HSBC says.
- Dimon's annual letter: Risks, rates and trading.
- Low-key Jack Lew becomes sledgehammer.
- Venezuela declares every Friday a holiday to save electricity.