Tokyo Core CPI Worse than Expected

Deutsche Bank fears ruled the markets overnight yesterday and today. It is a character of rumors that the effects of it are due more to what is unknown than what is really known. That is the same case we see here as well where what is known about the problem in the bank is nothing compared to what is unknown and this is what really spooked the markets all over the world yesterday. The S&P closed lower and this effect would continue to affect the markets in Asia and Europe today. It remains to be seen what the fears are about and it would be good for the traders to keep their ear to the ground and understand what is happening before they decide what they do with their trades.

As far as the morning news was concerned, we saw the release of the Tokyo Core CPI which came in at -0.5% which was slightly worse than the expected -0.4%. It further weakened the yen after a topsyturvy day yesterday for it when it weakened during the first of the day as risk appetite returned and then strengthened during the second half of the day as the risk fears returned. We expect the yen to continue to weaken during the days ahead as the new BOJ policy announced on Sep 21 begins to take effect.

Though we had the Fed Chief Yellen also making a speech late night, it was not in any way related to the markets or the monetary policy as such and hence it did not have any effect on the FX markets. Today is the last day of the month and we expect a lot of adjustments and month end currency flows to happen and this is likely to affect the prices of the Euro and the pound atleast until the London fix. It is also the day before the weekend and the liquidity is likely to get lower and lower as the day progresses. Stay safe and trade safely. If you are not confident, stay on the sidelines.
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