Is the yen-dollar spike really risk-on? "February 20 highlights and event schedule"

Yesterday, the dollar/yen started in the high 109s and rose sharply in the European and U.S. sessions!

It is rising to as high as 111.50 yen at one point as stops were triggered.

Rather than a strength in the dollar, the yen weakness is pushing cross-yen pairs higher across the board.

Global stock prices are also rising.

One concern, though, is that gold prices are also rising.

Whether this is a risk-on or not, gold prices may become a key point in judgments.

◎ Today's Points of Interest

1) Risk-on?

Yesterday's rise in the USD/JPY was overwhelmingly driven by selling the yen.

Reasons for yen selling include
・Reversal of yen buying as COVID-19 is expected to subside quickly

・Stop losses from positions that viewed USD/JPY as a range-bound or falling

・Withdrawal of overseas funds from the Japanese market
・Whales' foreign bond investments
These factors are thought to be at play.

Also, the dollar is being bought to some extent, likely due to a lack of other currencies to buy.
This is probably a process of elimination.

Today, I am watching the following developments.

If the impact of COVID-19 is subsiding, the yen may remain weak and stocks may rise, but USD/JPY could struggle around 112.00–112.20, and the Nikkei may face resistance at the 24,000 level.

If the withdrawal of foreign funds is strong, even if stocks rise on yen weakness, stock falls could follow as yen weakness continues.

If whale activity in foreign bonds is not sustainable, but Japan is determined to keep around the 110 yen level or higher, it seems whales may appear as the price approaches 110 yen.

For now, I expect short-covering by Japanese market participants who were late to exit yesterday.

After observing the subsequent moves, I want to carefully determine the drivers of USD/JPY, especially the yen-selling factors.

2) Australian Employment Data

The recent statements from the RBA board meeting, Governor Lowe's press conference, Lowe's parliamentary testimony, and the RBA minutes have shown a mix of dove, neutral, and hawkish tones.

Australian dollar was bought after the RBA board statement unexpectedly appeared somewhat hawkish, but the minutes present a neutral-to-slightly-dovish interpretation, leading to a sell-off in AUD.

Nevertheless, the focus remains on employment; future RBA policy decisions are likely to be heavily influenced by employment data.

Today's release is January employment data.

We don't know how much of COVID-19's effects are reflected, but if there is a deviation from expectations, there could be significant movement, so be careful.

Of particular interest is the unemployment rate—whether it can slip below 5%, hover in the low 5% range, or worsen to the high 5% range.

3) ECB Minutes

With Draghi replaced by Lagarde as ECB President, there is a review of inflation targets and monetary policy.

I am watching what the minutes reveal about the policy stance going forward.

Here is a Reuters article summarizing the previous council meeting contents↓↓↓

http://jp.reuters.com/article/lagarde-highlights-idJPKBN1ZM2EL

◎ Today's Economic Events Schedule

February 20 (Thursday)

09:30　AUDAustralian Employment Change and Unemployment Rate

16:00　EUR Germany GfK Consumer Confidence

16:45　EUR France HICP (Consumer Price Index)

18:30　GBPUK Retail Sales

19:30　EUR Degointos ECB Vice-President

21:30　EURECB Monetary Policy Meeting Minutes (Jan 23)

22:30　USD Philadelphia Fed Manufacturing Index

22:30　CAD Canada new housing price index

February 21 (Friday)

Iranian Parliamentary Elections

00:00　EUR Euro-area Consumer Confidence

00:00　USD U.S. Conference Board Leading Economic Index

01:30　USD Crude Oil Inventories

07:00　AUD Australian Services/Manufacturing PMIs

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