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Sell apples, buy yen

A spike and a half

On Wednesday Apple downwardly revised its revenue forecast, citing falling sales in China. Later in the day someone or something took the yen for a walk in a thin market on a Tokyo bank holiday. These two events may be connected.

To describe it as a spike would be an understatement. At its extremes the yen was 8% higher against the Turkish lira, 7% up against the Aussie and 5% firmer against the pound. The upward move happened in less than ten minutes and the subsequent retracement took about 20 minutes. The outcome is a net daily gain of 3.8% for the yen against sterling and it is 3.1% higher against the euro.  

Analysts ascribe the spike to risk-aversion, illiquidity, automated trading algorithms and stop-loss selling but the bottom line is that nobody can say for sure what it was really all about. The word on the street this morning, however, is that last night's move is a harbinger of a stronger yen in 2019.

Sterling taking the fall

Sterling did not have a good day yesterday. Jointly with the Swedish krona it took last place, falling by an average of 1.1% against the other majors. As with the yen, there was nothing concrete to account for the pound's decline.  

The single UK statistic - the purchasing managers' index for the manufacturing sector - looked entirely respectable at face value. Half a point higher and above forecast at 54.2 it was the best of the day's bunch. However, it may have been no more than a flash in the pan, distorted by inventory-building in preparation for Brexit. There can be no doubt that it was Brexit that was on most investors' minds yesterday morning, not the stronger PMI.

The rest of the day's PMIs were roughly in line with economists' predictions. Sweden's 52.0 was three and a half points lower on the month, accounting for the krona's joint last place. France and Italy were both down in the contraction zone at 49.7 and 49.2 while Germany and pan-Euroland scored 51.5 and 51.4. Canada came in at 53.6, just behind the States' 53.8.

Construction PMI

The only UK statistic on today's agenda is the construction PMI. Given investors' oblivion to yesterday's manufacturing figure it is doubtful that the construction reading will make any difference to sterling.  

The other PMIs today are Switzerland's SVME, pencilled in at 57.2, and the belated manufacturing figure from America's Institute for Supply Management, where analysts are looking for 57.9. The remainder of the list comprises Euroland money supply and US jobless claims and the ADP employment change figure.

The ADP number will shape expectations for tomorrow's US employment report, which includes the highly-influential nonfarm payrolls measure, which is expected to be up by 177k on the month. Canada also reports on jobs tomorrow. The UK ecostats will relate to shop prices, the services sector PMI, money supply and consumer lending, including mortgage approvals. Provisional euro zone inflation also comes out on Friday, along with a cluster of services PMIs. 

GBP shares last place despite stronger PMI

GBP shares last place despite stronger PMI

USD two cents higher ahead of Friday's jobs data

USD two cents higher ahead of Friday's jobs data

EUR on average unchanged against the majors

EUR on average unchanged against the majors

SEK lags following softer manufacturing PMI

SEK lags following softer manufacturing PMI

JPY surges as investors run for cover

JPY surges as investors run for cover

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