• Japanese yen surge on Ueda remarks the big story to start the new week
• Japan’s Matsuno: Monetary policy specifics are up to BOJ to decide
• European Commission cuts Eurozone growth forecast amid building recession risks
• PBOC to tighten scrutiny on bulk dollar purchases of $50 million and above – report
• Yuan exchange rate has solid basis to stay reasonably stable – PBOC
• China August M2 money supply +10.6% vs +10.7% y/y expected
• SNB total sight deposits w.e. 8 September CHF468.9 bn vs CHF 467.6 bn prior
• Kremlin confirms North Korea’s Kim Jong Un to visit Russia in the coming days

Markets:

• AUD leads, USD lags on the day
• European equities higher; S&P 500 futures up 0.4%
• US 10-year yields up 4.6 bps to 4.302%
• Gold up 0.3% to $1,924.28
• WTI crude down 0.6% to $86.96
• Bitcoin down 1.1% to $25,609

The major story so far today remains the surge in the Japanese yen, following weekend comments by BOJ governor Ueda touting a „quiet exit“ from the current ultra easy monetary policy settings.

As European trading began, USD/JPY extended losses by over 1% in a drop to 145.90 before recovering back to around 146.70 levels now – still down by 0.7% or 100 pips on the day.

The unwinding in USD/JPY longs also led to a notable decline in the dollar across the board. The antipodeans benefited the most amid a jump in the Chinese yuan as well, helped by some support from Beijing.

AUD/USD is up 0.9% to 0.6430 and keeping at the highs while NZD/USD is up 0.6% to 0.5915, also maintaining gains for the most part.

The euro and pound are only marginally higher against the dollar with EUR/USD up 0.2% to 1.0720 and GBP/USD up 0.4% to 1.2510 with the latter hoping to stop a run of four straight consecutive daily losses.

As the yen legged higher, it comes as 10-year JGB yields also hit the 0.70% threshold and that is underpinning bond yields in general. 10-year Treasury yields are up 4.6 bps to 4.302%, so that is also one to watch as it threatens the August highs. The dollar might be pressed lower now but higher yields could yet be a saving grace for the greenback.

In the equities space, stocks are capitalising on the softer dollar with European indices and US futures holding a slight advance. But we’ll see if there is appetite to keep that going through the week, with the US CPI report coming up on Wednesday.

This article was written by Justin Low at www.forexlive.com.