Summary:

  • Safe haven flow retreats amid benign Asian session
  • Treasury Secretary Mnuchin speaks on taxes, income
  • Japanese firms doubt the BoJ could strike the inflation goal at all

There has been exceptionally benign Asian session on the FX market with the safe haven currencies being the worst performers. The yen has been the weakest currency in G10 so far and the Swiss franc has been a bit stronger. There were no crucial economic releases during the Asian session. Either way, it’s worth mentioning the Reuters survey in Japan.

According to the survey, as much as 37% of Japanese firms see that the BoJ will need more than 3 years to achieve its inflation target, while 31% deem the target it’s not feasible at all. Weighing this month’s survey against that conducted in October last year, there was a 5% uptick with regard to a count of companies which doubt the BoJ is still able to strike the objective.

link do file download linkThe CHF and JPY are among the poorest currencies in G10, losses are not large though. Source: xStation5

Moreover, it’s worth recalling remarks delivered by US Treasury Secretary Steven Mnuchin yesterday. He said that it wants more income for middle class in tax reform and aims to work with the Congress to increase the debt limit. Let us recall that the debt limit has to be lifted to the end of September in order to avoid a technical default of the US economy. His comments were not conclusive when it comes to another step to slash taxes having a negligible impact on the US dollar. Having said that, upcoming weeks could turn out to be critical for the US currency where fiscal policy and negotiations as far as an increase of the debt ceiling might play the major role.

link do file download linkThe USDCHF has bounced off the support and could aim at 0.9760 if a rebound is sustained. Source: xStation5

The USDCHF has been able to defend an important support zone which has tended to act as a springboard for bulls as of yet. Having assumed that a rebound has been sustained, a move towards 0.9760 cannot be ruled out. Nonetheless, subsequent terrorist attacks or other geopolitical tensions could buttress the Swiss currency anew.