usd/jpy

The Japanese yen has edged lower on Thursday. In the North American session, USD/JPY is trading at 147.62, up 0.08%.

US GDP roars with 3.3% gain

The US economy continues to surprise with stronger-than-expected data. On Wednesday, the services and manufacturing PMIs both accelerated and beat the estimates, followed by first-estimate GDP for the fourth quarter earlier today.

The economy sparkled with an expansion of 3.3% q/q, blowing past the consensus estimate of 2.0%. This follows the blowout gain of 4.9% in the third quarter. Consumer spending remained strong at 2.8%, compared to 3.1% in the third quarter. The US economy expanded in 2023 at 2.5% y/y, up from 1.9% in 2022. The US dollar’s reaction to the positive GDP report has been muted.

There were concerns earlier this year that the economy might tip into a recession, as the Fed continued to raise interest rates to beat down inflation. However, solid consumer spending and a resilient labour market have boosted economic growth

Intraday Market Analysis – EUR Builds Up Bullish Reveal - 29.10.2021

Intraday Market Analysis – EUR Builds Up Bullish Reveal - 29.10.2021

Jing Ren Jing Ren 29.10.2021 09:04
The euro surges as the market prices in inflation pressure despite the ECB’s dovish message. Bullish candles have pushed the single currency above the triple top (1.1665) which sits on the 30-day moving average, paving the way for a reversal. Strong momentum is a sign of short-covering from those caught on the wrong side of the market. An overbought RSI could temporarily limit the range of the rally. However, renewed optimism may send the pair to the daily resistance at 1.1750. 1.1620 is the support in case of a pullback. USDJPY tests demand zone The Japanese yen recouped losses after the BOJ sees a weak yen as positive for Japan’s economy. And the US dollar has come under pressure near a four-year high. An overbought RSI on the daily chart points to an overextension. On the hourly level, the pair has found bids around 113.30 near a previous consolidation range. A bearish breakout would test the round number at 113.00, which lies on the 20-day moving average and is critical in safeguarding the uptrend. The bulls need to lift 114.30 before they may resume the rally. US 30 pulls backs for support The Dow Jones consolidates as investors digest earnings near the all-time high. A breakout above the August peak at 35600 and a bullish MA cross from the daily timeframe indicate an acceleration on the upside as the rally continues. Pullbacks could be an opportunity to buy low. An overbought RSI has triggered a minor sell-off below 35600, shaking out weaker hands in the process. A drop below 35450 would lead to the psychological level of 35000. 35830 is now a fresh resistance.
USDJPY - an interesting pair, a few words about US 100

USDJPY - an interesting pair, a few words about US 100

John Benjamin John Benjamin 27.12.2021 10:59
USDJPY breaks higher The US dollar inched higher after November’s core PCE jumped to 4.7%. A break above the supply area near 114.20 indicates that the bulls have gained the upper hand. As sellers rush to the exit, the pair may enjoy solid support above the former resistance at 114.05. An overbought RSI has temporarily limited the initial breakout range. After a short accumulation phase, the bulls may have an unobstructed path towards the psychological level of 115.00. That is a major hurdle right under the previous peak. USDCAD retreats to daily support The Canadian dollar bounces back as GDP growth gained traction in October. The US dollar is struggling for support after its tentative break above the August high at 1.2950. A retreat below 1.2900 has led traders to dump leveraged positions. The pair is testing the daily support at 1.2760 which lies along the 30-day moving average. And this makes it an area of interest for the bulls to attempt a rebound. 1.2920 is a fresh resistance ahead. A deeper correction may send the greenback to 1.2650 near December’s lows. US 100 completes V-shaped recovery The Nasdaq 100 continues to recover as improved economic data outweigh covid concerns. The index has met solid buying interest near 15600. This used to be a supply zone from last September. Since then it has recouped losses from the recent liquidation. The RSI’s overbought situation may cause a brief pullback while short-term traders take profit. 16170 is the closest support and 15850 is another layer of defense. On the upside, a break above 16460 could extend the rally to the all-time high at 16770 and beyond.
Greenback Skyrockets! Record-Breaking US Dollar (USD)!? Is It Possible For Dollar Index (DXY) To Reach 112 As In Early 2000s? Fed Decision Incoming!

Greenback Skyrockets! Record-Breaking US Dollar (USD)!? Is It Possible For Dollar Index (DXY) To Reach 112 As In Early 2000s? Fed Decision Incoming!

Alex Kuptsikevich Alex Kuptsikevich 19.04.2022 10:34
The dollar index passed 101, which we last saw for just over a week at the height of the lockdowns. But history suggests that this rally has roughly passed the halfway point. DXY is unlikely to stop near 103-104 as it has done in the last six years Except for a brief period of stock market panic in March 2020, the last time the dollar was at this level against a basket of the six most popular currencies was in April 2017. The Dollar Index peaked in the 103-104 area in both cases and has not traded consistently higher for the past 20 years. Read next: (UKOIL) Brent Crude Oil Spikes to Highest Price For April, (NGAS) Natural Gas Hitting Pre-2008 Prices, Cotton Planting Has Begun The past two times, the dollar’s rise has been halted by the Fed, easing its policy or tone of commentary, as we have seen stock and commodity markets crash along with the USD rally. That is not the case this time, so the DXY is unlikely to stop near 103-104 as it has done in the last six years. For USDJPY, it could spike to 140, which has not been seen since 1998 We are now seeing a rise in the dollar, mainly on the Fed’s switch to monetary tightening mode. We saw that the last three such impulses of dollar growth, which started in 2014, 1998, and 1992 caused the DXY to appreciate by about 25%. For you: Forex Rates: British Pound (GBP) Strengthening? Weak (EUR) Euro? GBP, NZD And AUD Supported By Monetary Policy? Applying this pattern to the current case, we get that the dollar has exhausted just over half of its upside potential and could strengthen as much as 110-112 on the DXY in the next few months. For EURUSD, this scenario sets up a plunge towards parity, the lows of the last 20 years. For USDJPY, it could spike to 140, which has not been seen since 1998. And for GBPUSD, a return to 1.2000, the lows of the Brexit-fear era.
The US Has Again Benefited From Military Conflicts In Other Parts Of The World, The Capital From Europe And Other Regions Goes To The US

What A Plunge Of Japanese Yen (JPY)! US Dollar (USD) Is Really Strong! Will Bank Of Japan (BoJ) Raise The Interest Rate? USDJPY And More In Eyes Of Saxo Bank

Saxo Bank Saxo Bank 19.04.2022 12:06
Forex 2022-04-19 10:30 Summary:  The Japanese yen has seen a relentless decline over the last few weeks, underpinned by a widening yield differential between the US and the Japanese government bonds. As verbal interventions from the Bank of Japan and Ministry of Finance fail to be heard, we are looking at a subtle policy shift with the aim to manage volatility, or a real physical intervention. The JPY continues to run away to the downside, with USDJPY surging above 128.00 for the first time since 2002. The next major chart point is the early 2002 high near at 135.00. AUDJPY has also surged to fresh record highs of 94.50+ as the AUD was slightly firmer following the hawkish tilt in RBA minutes. Read next: (UKOIL) Brent Crude Oil Spikes to Highest Price For April, (NGAS) Natural Gas Hitting Pre-2008 Prices, Cotton Planting Has Begun The big why? US 10-year treasury yields have notched a new cycle peak and will soon threaten the 3.00% level if they continue to rise, widening the policy divergence with the Bank of Japan (BOJ), that continues to stick with its yield-curve-control (YCC) policy that caps 10-year Japanese government bond yields (JGB) yields at 0.25%. Both the BOJ and the Japanese Ministry of Finance (MoF) have stepped up their verbal interventions against JPY volatility as recently as overnight, but these have hardly had any effect. The BOJ conducted unprecedented four-day purchase plan into the end of its financial year on March 31 after the JGB yields had hit 0.25%, a ceiling the central bank had made clear in March last year. This further highlighted their commitment to capping yields. While the BoJ may be concerned about the volatility and the pace of JPY decline, the Bank is unlikely to be worried about its direction. In fact, BOJ rhetoric repeatedly suggests that it sees JPY weakness as good news for the economy and exports as well as a factor helping to spur imported inflation pressures. This is especially important if we note that GDP is still well below pre-COVID levels and core inflation is negative. Is inflation a concern? The rise in JGB yields has little to do with expectations that Japanese inflation is moving sustainably higher. CPI is expected to increase above the BOJ’s 2% (from 0.9% currently) target, but the central bank expects the move to be temporary. Much of the gains in inflation are on the back of base effects and higher energy prices, and underlying price pressures remain muted. Stripping out energy prices and fresh food clearly shows that core inflation is still very benign at multiyear lows at -1% y/y. Will the YCC be tweaked? We are probably starting to see the limit of the yield curve control program, as sustained BOJ purchases could be a problem for a central bank that already owns around half of government issues. Would the BOJ go Australia’s way that clumsily abandoned its peg in November? That would need more domestic demand for JGBs which is unlikely to be achieved. Historically, BoJ has been open to adjusting targeting range of bond yields. It widened the range to +/-0.25% from +/-0.20% in March 2021, which was changed in July 2018 from +/-0.10% before that. The BoJ could tweak its YCC policy to target 10-year yields form +/-25bps to +/-30bps to give itself more flexibility and manage volatility. This move, if effected, will be communicated as a measure to manage the increased volatility in bond markets, to ensure that it is not taken as a sign of any shift in policy thinking. Article on Crypto: Hot Topic - NEAR Protocol! Terra (LUNA) has been seeing a consistent downward price trend, DAI Should Stay Close To $1 What to watch next? Our sense is that until a policy shift is spotted, or real intervention is mobilized, the market is content to continue driving the JPY lower. Ironically, in the past, the MoF has mobilised intervention in the yen in the direction of avoiding further JPY strength, not weakness. These interventions may not achieve more than temporary success if the underlying policy and market dynamics don’t shift (i.e., the BOJ sticking to its current policy while inflationary pressures and yields elsewhere continue higher). But the risk of tremendous two-way, intraday volatility should be appreciated. Japan’s Finance Minister Suzuki is heading for a bilateral meeting with the US and comments would be on watch. Next BOJ meeting is scheduled for April 27-28, but focus will still be tilted more towards the Fed’s May meeting where a 50bps rate hike is expected along with the start of quantitative tightening. The only other way could be to hope that the yen would find a floor, and wait for BoJ governor Kuroda’s tenure to end in April 2023. This may then be followed up with rate hikes.
ECB's Dovish Shift: Markets Anticipate Softer Policy Guidance

Mayday! (JPY) Japanese Yen Is Surging! Can Bank Of Japan Help USD/JPY? Interaction With Fed Coming?

Alex Kuptsikevich Alex Kuptsikevich 19.04.2022 15:05
The pressure on the Japanese yen persists in the markets. The USDJPY has been hitting 20-year highs almost daily since last week, rising 11.8% to 128.40 since early March. Since the beginning of the year, the yield spread between the 10-year US and Japanese bonds has doubled to 2.7%, on the back of rising US performance, which has sharply increased the attractiveness of US long-term bonds. The currency in such an environment works as a shock absorber, returning competitiveness to the economy. USD To JPY (USD/JPY) Chart  A hand-tied Bank of Japan is unlikely to be able to offer anything serious to reverse the yen However, in the USDJPY equilibrium exchange rate equation, you also have to add the changed reality with the surge in prices of commodities and energy imports in Japan. Capital is leaving the country, taking refuge in the USA or commodity-exporting countries that can now enforce the tighter monetary policy. A hand-tied Bank of Japan is unlikely to be able to offer anything serious to reverse the yen. It’s also not in the interests of the country’s finance ministry, which could use a weaker yen to deflate its enormous government debt. This opens the yen up for further declines, potentially into the region of 140 per dollar, where the exchange rate was last seen during the Asian debt crisis, and even earlier, in the early 1990s, when the world last experienced a similarly high rate of consumer inflation.
Indonesia's Inflation Slips, Central Bank Maintains Rates Amidst Stability

Record-Breaking US Dollar To Japanese Yen (USD/JPY): Turbo-accelerated Dollar Index (DXY) Makes Not So Strony JPY Plunge Against The Greenback

Conotoxia Comments Conotoxia Comments 19.04.2022 21:27
The dollar index reached 101 points on Tuesday for the first time since March 2020, which may be influenced by rising U.S. Treasury bond yields. Investors appear to be awaiting a series of half-point interest rate hikes from the Federal Reserve as it tries to rein in rising inflation. James Bullard, the St. Louis Fed chairman known for his hawkish views, said Monday that U.S. inflation is far too high, reiterating his case for raising interest rates to 3.5 percent by the end of the year. Will the Fed accelerate interest rate hikes? Last month, the Fed raised its target interest rate by 25 basis points, and forecasts released at the time indicated that interest rates could rise to 1.9 percent by the end of the year. Bullard's preferred path would require rate hikes of half a percentage point at all six remaining Fed meetings this year. James Bullard's remarks also included a statement that interest rates could rise by 75 basis points to accelerate the entire monetary tightening cycle. Article on Crypto: Binance Academy: Immutable X Token (IMX) - What Is It? IMX Explained. How To Buy IMX?| FXMAG.COM From a monetary policy perspective, there may be a strong divergence between the actions of the Fed and the rest of the central banks, including the Bank of Japan. This in turn may translate into currency rates, including the USD/JPY pair, which is trading at 128 yen per dollar. Weakness of the yen beneficial for exporters Since the beginning of the year, the yen may have lost 10 percent against the U.S. dollar, and more than 5 percent in April alone. In this situation, as calculated by Bloomberg, the yen seems to have lost the most against the dollar since 1971. A weak yen theoretically can help the Japanese economy raise the inflation rate due to more expensive imports of products from abroad. It can support Japanese manufacturers who export their goods, potentially making them more competitive. Thus, for Japan, the current situation may be quite comfortable. Only inflation getting out of control would be an undesirable phenomenon. SNB limits the appreciation of the Franc The USD/CHF exchange rate recorded 12-month highs as the pair may be under pressure from a strong dollar despite potential interventions by the Swiss Bank. Current deposits at the SNB increased by CHF 2.2 billion in the week ending April 8 from the previous week, following an increase of CHF 5.7 billion in the previous week. Article on Crypto: Altcoins Showing Promising Growth - Take a Look at Solana (SOL), POLKADOT (DOT) and SHIBA INU (SHIB-USD)| FXMAG.COM The rise in deposits is widely seen as an indicator of the central bank's foreign exchange interventions dictating the amount of credit added to the sight accounts of commercial banks that hold freshly created francs in exchange for foreign currency. At its last meeting, the SNB stressed that it would limit the appreciation of the franc, which is near a 7-year high against the euro. This level was reached after Russia's invasion of Ukraine. Daniel Kostecki, Director of the Polish branch of Conotoxia Ltd. (Forex service) Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 80.77% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Powell signals Fed needs to be nimble, Canada Inflation hits near 40-year high, bitcoin tries to hold USD20k

What Moves Forex Rates? Strong US Dollar Affects British Pound (GBP), Japanese Yen (JPY) And CNH

Alex Kuptsikevich Alex Kuptsikevich 22.04.2022 13:32
The world's major currencies continue to surrender to the dollar one after another. Since the start of March, the yen has lost 11.5% and fallen to a 20-year low. But just as we saw the third world economy currency stabilise, the currency of the second one went on the move. Chinese currency had previously successfully resisted the strengthening of the USD since the middle of last year, but The dollar has added over 2% to the renminbi since the start of the week, the most significant move since 2015. It is also noteworthy that the Chinese currency had previously successfully resisted the strengthening of the USD since the middle of last year, but in an abrupt move, entered the area of the extremes of the last 12 months. Read next (FxPro): Still Going Up The Price Of Crude Oil (WTI/BRENT) When Energy Stocks Will Start To Soar? | FXMAG.COM We see an equally impressive attack on the Pound. The GBPUSD broke the support at 1.3000 on Friday, and it is already losing more than 1% so far today. USDCHF reached its highest point since June 2020, exceeding 0.9550. Read next (FxPro): Want To Exchange 100 GBP To USD? GBP/USD Below 1.3000! (GBP) British Pound Weakens! GBP To USD - 17-Months-Low! | FXMAG.COM The New Zealand and Australian dollars have been declining steadily since early April, despite hawkish action and comments from respective central banks. Moreover, the export-oriented economies of these countries should benefit from the emerging commodity prices. EURUSD is trading below 1.0800, near 2020 reversal levels and maintaining a very moderate trading range The USDCAD went back to month highs in less than two days, reversing Wednesday's sharp rally and earlier gains from hawkish comments by the Bank of Canada. EURUSD is trading below 1.0800, near 2020 reversal levels and maintaining a very moderate trading range. However, the swing in GBPUSD today and USDCNH throughout the week and the USDJPY drama since early March suggests that EURUSD could be the next victim of dollar bulls.
Steady BoE Rate Expectations Amid Empty Event Calendar in the UK

What Bank of Japan Is Going To Do? Solid USD Against Japanese Yen, SEK (Swedish Krone) To Be Supported By Riksbank Shortly?

John Hardy John Hardy 27.04.2022 14:15
Summary:  The Japanese government is rolling out a large fiscal package to ease cost-of-living pressures at a time when inflation in Japan supposedly remains muted. This is entirely out of step with the Bank of Japan doubling down on its accommodative policy mix, which has driven the Japanese yen sharply weaker this year. Will the Bank of Japan be forced to capitulate tonight? FX Trading focus: Bank of Japan meeting tonight as pressure on policy mix mounts, EUR and GBP in for fresh pressure on Russian NatGas threats, AUD and SEK ahead of Riksbank The JPY has found a bit of support this week on the consolidation in global bond yields. Yesterday saw a strong US 2-year Treasury auction that helped take yields lower at the front end of the curve as well, with risk-off finally strong enough in the background to see US treasuries serving as a safe haven. The falling yields factor by itself brings the JPY some relief, as has the Chinese decision to allow a so-far modest revaluation of its currency lower that will bring more relative support to the JPY if that move is extended. But to really reset the JPY level back higher after its runs to multi-decade lows in real-effective inflation-adjusted terms, we will need to see a policy change from the BoJ. The BoJ meets tonight, and while very few are expecting a shift, it wouldn’t take much of a hint to suggest the pressure on the BoJ via the weakening currency is becoming too strong to ignore. Even a hint that the Bank is mulling tightening without specifics could be enough to trigger a JPY rally, but spelling out that the bank is willing to tinker with its yield cap policy on 10-year JGB’s would likely spark an even sharper move. Meanwhile, the political pressure has to be mounting sharply as well: consider that overnight the Japanese government has passed a near JPY 6.2 trillion (approx. $50 billion) stimulus package aimed at offsetting cost-of-living pressures that are sorely felt by the most vulnerable in Japan. This at a time when inflation supposedly remains unsatisfactorily low. For whom the inflation bell tolls is an critical question both in Japan and globally as we have to consider that these cost of living pressures that may only measure in the mid- to high single digits nationally could weigh 20% or more for the consumption basket at the lower end of the income spectrum, in terms of rent, heating, food, etc. It’s an explosive cocktail for politicians and Japan is set for important lower house elections in July. The BoJ may not move tonight, but it can’t remain an immovable object in a rapidly moving world forever. Keep in mind that Japan is on holiday Friday and out for much of next week, so this could aggravate the volatility if the BoJ does deliver any new guidance or policy twists. Chart: USDJPY Watching the USDJPY pair and JPY crosses closely tonight over the Bank of Japan meeting for the reasons outlined above. Technically, the pair seems to have shied away from a test of the 130.00 level, while on the downside, any BoJ policy surprise could deliver tremendous intraday volatility – easily 125.00 or lower, given that the recent break level to the upside was all the way down at 116.35. JPY traders should tread carefully, considering long volatility plays in the options market if wanting to express a short-term view. JPY cross action may prove higher beta than the reaction in USDJPY itself. As well, Japan will be out on holiday over next week during the May 4 FOMC meeting so liquidity may prove thinner than usual. If we see Kuroda-san doubling down on the existing policy and a fresh surge in global yields, the uptrend could be reinvigorated for a try toward 135.00. It’s a pivotal week for USDJPY either way, in all likelihood. Source: Saxo Group Fresh euro woes. The euro touched new five-year lows versus the US dollar today, in part on general risk off, but perhaps even more so after Russia used Poland and Bulgaria as guinea pigs in its threat to cut off supplies of natural gas for importers unwilling to pay for the gas in rubles. Poland saw the writing on the wall on Russian gas a long time ago and had moved to reduce its reliance before the war in Ukraine and has considerable coal-based power it can mobilize to cover some  of the shortfall, so the impact on the zloty is considerable, but need not spin out of control. Alas, Germany is the chief focus as a full shutdown would crater German economic growth on the need to ration supplies. Meanwhile, ECB member Kazaks said yesterday he is in favour of a July ECB hike – looks like consensus is gelling on that timing for lift-off. The UK does not import Russian gas, but is under as much pressure as any other European country on the impact of any Russian supply disruptions because it is connected to the continent’s gas network and suffers the price rises together with the continental countries. An excellent commentary from Bloomberg’s Marcus Ashworth lays out the pressures on the UK economy here as it faces a “trilemma of high inflation, slowing growth and rising taxes”, with a collapsing currency possibly forcing the Bank of England to hike rates more than it would otherwise do (watching EURGBP as much as GBPUSD for the relative pressure on the UK as I would have already expected sterling to underperform more there than it has). GBPUSD looks set for a test of 1.2000 and possibly more to the downside if we are set for a significant deleveraging event across risky assets here. The Aussie tried to get a boost on news overnight that Chinese leader Xi Jinping called for an “all out” infrastructure building push to spark economic growth, but there are few details. As well, short Australian yields touched new cycle highs while yields elsewhere consolidated after the Q1 Australian CPI report came in far hotter than expected at 5.1% YoY vs. 4.6% expected and the core “trimmed mean” was out at 3.7% YoY vs. 3.4% expected. This has strongly raised the odds of a rate hike at the RBA meeting next Tuesday to above 70%. The solid drop in the trade-weighted AUD in recent days after it had spiked to near a 5-year high has likely helped the RBA to go ahead and just get started already. The Riksbank is widely expected to deliver its first rate hike since moving away from NIRP last year, with a 25 basis point move. Watch the rate guidance after Governor Ingves recently failed to push back against the market pricing a greater than 2% policy rate by the beginning of 2024 – while the February Riksbank meeting still forecast lift-off not to arrive until 2024! I like fading EURSEK upside, but the risk deleveraging here makes this hazardous tactically. Table: FX Board of G10 and CNH trend evolution and strength.Note especially the enormous positive momentum shift in the JPY head of tonight’s BoJ meeting – will BoJ deliver something that spikes momentum further or back to the downtrend? The USD uptrend reading of 8 is getting into extreme territory, but won’t necessarily calm if risk deleveraging continues/accelerates. Source: Bloomberg and Saxo Group Table: FX Board Trend Scoreboard for individual pairs.The “hottest” market in a long while, as can be seen in all of the extreme ATR readings (the dark orange color indicates we are in the top decile of volatility in ATR over last 1000 trading days). Source: Bloomberg and Saxo Group Upcoming Economic Calendar Highlights (all times GMT) 1230 – US Mar. Advance Goods Trade Balance 1400 – US Mar. Pending Home Sales 1600 – ECB President Lagarde to speak 2100 – New Zealand RBNZ deputy Hawkesby to speak 2230 – Canada Bank of Canada Governor Macklem to speak in Senate testimony 2350 – Japan Mar. Industrial Production 0100 – New Zealand Apr. ANZ Business Confidence survey 0130 – Australia Q1 Export / Import Prices
Tuesday's EUR/USD Analysis: Chaotic Movements on 30M Chart

Will US Dollar (USD) Beat British Pound (GBP), Japanese Yen (JPY) And All Other Currencies? Bank Of Japan To Tackle The Weaking Of JPY?

Marc Chandler Marc Chandler 27.04.2022 22:09
April 27, 2022  $USD, Australia, BOJ, Brazil, Currency Movement, Mexico, Russia Overview: Russia's decision to cut gas supplies to Poland and Bulgaria and the sharp sell-off in US equities yesterday casts a pall over the markets today.  But not the dollar. The euro punched through $1.06 for the first time in five years and the greenback turned higher against the yen after falling to a seven-day low.  The major bourses in the Asia Pacific region fell by more than 1% except China and Hong Kong.  The Hang Seng eked out a minor gain, but China's CSI 300 rose nearly 3%.  Europe's Stoxx 600 gapped lower but has recovered with the help of materials, consumer discretionary, and energy sectors.  US futures are firm.  Treasury yields have recovered part of yesterday’s decline, putting the 10-year near 2.77% and the 2-year close to 2.58%.  European yields are mostly firmer and the core-periphery spreads are widening.  In the foreign exchange market, the greenback is mixed.  The Antipodeans and Scandis are firm, especially the Australian dollar, after the higher-than-expected Q1 CPI.  The yen, euro, and Swiss franc are heavy.  Emerging market currencies are mostly lower.  Of note, the Philippine peso and the Mexican peso are among the most resilient today.  Hungary, the only EU country that has agreed to pay Russia in roubles, is among the weakest (~0.9%).  That dubious honor goes to the South Korean won today, off 1.1%, the largest loss since last June and the fifth consecutive decline. Gold was sold to fresh two-month lows near $1887 before steadying.  June WTI is firm but in a narrow range (~$101.50-$103) near yesterday's highs.  US natgas prices are almost 0.75% higher after gaining nearly 5% over the past two sessions.  Europe's benchmark rose about 8.2% yesterday on top of yesterday's nearly 6% gain.  It is back to early April levels.  Iron ore rose for a second consecutive session, while copper is trying to end a three-day fall.  July wheat is steady after rising 2% yesterday.  Asia Pacific Australia's Q1 CPI rose 2.1%, faster than the 1.7% anticipated by the median in Bloomberg's survey and well above the 1.3% increase in Q4 21.  The year-over-year pace accelerated to 5.1% from 3.5%.  The underlying measures also rose.  The central bank meets next week, and the market sees the inflation figures as boosting the chances of a rate hike, which previously was expected after the May 21 election.  Yesterday the market had about six basis points of tightening discounted for the May 3 meeting.  Now there are 18 bp increase priced into the cash rate futures.   The Bank of Japan's two-day meeting began today.  Officials have clearly signaled no intention to change course.  Its defense of the 0.25% cap on the 10-year yield continued to today but the softer global yields yesterday took some pressure off the JGB market and there were sellers of 10-year bonds to the BOJ under its fixed-rate operation.  The BOJ is well aware that energy and food prices are lifting measured inflation and the reduction in wireless charges drop out of the 12-month comparison.  It pushes back and says that those developments do not make the increase in CPI sustainable.  Note too that the new economic package is estimated to shave 0.5% off headline CPI in the May-September period.   Many observers still seem to put the cart before the horse.  They are concerned that the weaker yen reduces Japanese demand for Treasuries.  The recent price action lends support for the hypothesis that the causation arrow is running the other way.  The increase in US yields weakens the yen.  The US 10-year yield peaked on April 20.  So did the dollar against the yen.  They both recorded eight-day lows earlier today and have recovered.  Moreover, the indirect bids show that the recent US Treasury auctions have been strong, including yesterday's two-year note sale.  That is where foreign participation is often picked up.   The dollar found a bid after slipping a little below JPY127. A $540 mln option at JPY126.75 rolls off today.  The greenback has already resurfaced above JPY128.  A move above JPY128.25 would lift the tone, but it needs to get above JPY128.50 to sign another attempt on the JPY129.50-JPY130 area. The Australian dollar recovered from around $0.7120 to almost $0.7200, but the upside momentum faltered and it fell back to the $0.7140 area in late Asia Pacific turnover.  That said, the intraday momentum indicators suggest the potential to retest the highs in North America.  The Chinese yuan is trading in its narrowest range for a little more than a week.  The dollar is consolidating its recent gains and traded roughly between CNY6.5480 and CNY6.5615.  The cut in reserve requirements for foreign currency deposits appears to have succeeded not in pushing the yuan higher but in steadying the exchange rate.  The PBOC set the dollar's reference rate slightly higher than expected in the Bloomberg survey (CNY6.5598 vs. CNY6.5596). Europe In a bizarre turn of events, Russia is insisting on being paid roubles for its gas while Europe is insisting to adhering to contracts to pay in hard currency, euros.  Russia is making good on its threats and announced that its cutting off gas supplies to Poland and Bulgaria.  Poland's gas supplies are around three-quarters capacity so the cut of new supply will not pinch immediately.  Bulgaria has indicated it has taken steps to secure alternative supplies.  Russia's actions do raise the question of who is next and that will likely be seen next month.  That said, Europe's reluctance or inability to move quicker on gas reveals their vulnerability, which Russia is exploiting.  It is quitting Europe before being fired, in a way.  Meanwhile, the tensions are rising in Moldova's breakaway region.  Some argue that Russia ultimately will likely link up the parts of Ukraine that it appears to be trying to take with the Moldova region, which would pen-in Ukraine.   Musk's leveraged buyout of Twitter is spurring a debate about freedom of speech in the US.  The constitutional right protects US citizens from abridgement of that right by Congress not by the private sector.  Clearly newspapers do not have to print all the op-ed submissions it receives and its not denying the rejected authors their freedom of speech.  In Europe, the reaction is different.  Musk is reminded that Twitter, regardless of its ownership structure, must adhere to the Digital Services Act, approved last week.  It forces the platforms to moderate illegal and harmful content that their users post.   The 1.4 bln euro option at $1.06 that expires today appears to have been neutralized.  The euro fell to about $1.0585 in late Asia/early Europe.  Initial resistance is seen near $1.0630 and then $1.0660. On the downside, the 2015-2017 lows were in the $1.0340-$1.0530 area, but there is increasing talk of a move to parity which has not been seen since 2002.  Sterling's losses have also been extended.  It fell to about $1.2535 before recovering to around $1.2590 in the European morning.  The $1.25 area represents the (61.8%) retracement of sterling's rally off the March 2020 low near $1.14.  The next chart point below there is the June 2020 lows around $1.2250.  Over the last five sessions, sterling has shed more than a nickel.  The lower Bollinger Band is set two standard deviations below its 20-day moving average and sterling's losses are nearly three standard deviations below the 20-day average.   America The US reports mortgage applications, which have fallen every week since the end of January but one. March pending home sales are expected to have fallen for the fifth consecutive month. The March trade deficit, which remains near a record imbalance, and March (wholesale and retail) inventories will help economists put their final touches on Q1 GDP forecasts ahead of tomorrow's report.  Due to the revisions in retail sales reported earlier this week, the Atlanta Fed's GDP tracker fell to 0.4%. It will update it again after today's reports.   As noted, there was a strong reception at yesterday's US sale of $48 bln two-year notes.   Indirect bidders took down 2/3 and direct bidders took another 21.4%.  This left the dealers with slightly more than 12%, the least in almost two decades.  On tap today are a $30 bln two-year floater auction and $49 bln 5-year note sale.  Still, the angst in some corners of the market about the implications of a strong dollar on foreign demand is unlikely to dissipate.   Bank of Canada Governor Macklem laid out the logic of raising rates even though it will have little impact on the prices of internationally traded goods that are understood to be the main drivers of Canadian inflation. He argued that keeping inflation expectations anchored will help prices ease when the higher energy and disrupted supply chains ease.   Mexico reports its March trade figures.  The balance may have swung into a small deficit after a $1.29 bln surplus in February.  Tomorrow it reports unemployment figures ahead of Friday's preliminary Q1 GDP.  After a flat Q4 21, it is expected to have grown around 1% in Q2 quarter-over-quarter.  Brazil reports April's IPCA inflation measure today.  It is expected to have accelerated to 12.15% from 10.79% in March. This will further challenge the signals by the central bank that next month could be the peak in what has been an aggressive tightening cycle.     The risk-off mood, which unlike when Russia first invaded Ukraine, is now seen as negative for commodities and commodity currencies.  The Canadian dollar has suffered in this phase despite constructive macro considerations.  The US dollar bottomed last week near CAD1.2460 and today has approached CAD1.2850.  The year's high was set in early March slightly north of CAD1.29.  The greenback has closed above its upper Bollinger Band for the last three sessions and remains above it (~CAD1.2810) now.  The greenback remains within the range set on Monday against the Mexican peso (~MXN20.16-MXN20.4850).  A convincing break of MXN20.50 could spur a quick move toward MXN20.60-MXN20.65.  Note the upper Bollinger Band is found today slightly above MXN20.40. The Brazilian real is a market favorite this year, with high yields, monetary policy near a peak, and commodity exposure. However, alongside Latam in general and the setback for metals, market participants have raced to reduce exposure in both the options and forward markets.  The dollar has jumped from around BRL4.60 a week ago to nearly BRL5.00 yesterday.  A move above there today could target the BRL5.20 area.       Disclaimer
Forex: USD/JPY Is Expected To Reach 145 In The End Of The Year. Why Is That?

(USD/JPY) Oanda: "Japanese yen stabilizes around 130"

Kenny Fisher Kenny Fisher 29.04.2022 11:49
Another week has meant more losses for the Japanese yen, as USD/JPY punched above the symbolic 130 line for the first time in 20 years. How badly is the yen doing? The currency last posted a winning week in February, and USD/JPY has soared 6.86% in the month of April. Not a good report card. The yen’s downswing has been sharper than expected, as USD/JPY has broken through resistance at 130 much more quickly than expected. The rapid movement in the exchange rate has drawn the usual jawboning from the BoJ and Japan’s Ministry of Finance (MOF), but aside from strong rhetoric, it’s unlikely that we’ll see any intervention with the aim of propping up the battered yen. On Thursday, while the MoF said that the yen’s descent was “extremely worrying”, BoJ Governor Kuroda reiterated that a weak yen was good for Japan’s economy. BoJ focused on yield curve control The BoJ doesn’t want to see the yen continue to plummet, but its focus is on stimulating the economy, not on the exchange rate. We’ve seen the BoJ show its determination to protect its yield curve control, as the Bank continues to offer to make unlimited purchases of 10-year JGPs in order to cap yields at 0.25%. The BoJ will continue its ultra-accommodative policy, even though this will put it out of sync with the Federal Reserve and other major central banks, which are tightening policy in order to combat soaring inflation. If the price for this policy is a falling yen, so be it, in the minds of BoJ policymakers. If there is a “line in the sand” when it comes to the yen’s value, any intervention is likely to come from the MoF rather than the BoJ. After decades of deflation, Japan is finally experiencing some inflation, but at much lower levels than in the US and elsewhere. Until inflationary pressures increase, the BoJ will have a free hand to pursue its ultra-loose policy, and that could spell more trouble for the yen. USD/JPY Technical USD/JPY has broken below support at 129.89. Next, there is support at 1.2807 There is resistance at 1.3122 and 1.3304 This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
US Dollar To Japanese Yen (USD/JPY) Forecast: Three reasons to sell the pair as the tides turn against it | FXStreet

US Dollar To Japanese Yen (USD/JPY) Forecast: Three reasons to sell the pair as the tides turn against it | FXStreet

FXStreet News FXStreet News 16.05.2022 16:09
The yen has returned to attracting safe-haven flows as China's covid crisis intensifies. Fear of a Fed-fueled recession is pushing 10-year Treasury yields lower. Technicals are pointing to a clear peak and a clearer downtrend. USD/JPY bearish – there are good reasons to expect the currency pair to fall, and the trade seems more straightforward than other ones. *Note: This content first appeared as an answer to a Premium user. Sign up and get unfettered access to our analysts and exclusive content. 1) When things go wrong in Asia, buy the yen The yen benefits from safe-haven flows related to China's aggressive policies against covid. Lockdowns in Shanghai and Beijing, the world's second-largest economies largest and most important cities, are hurting the economy. Recent retail sales figures showed a plunge of 11.1% YoY in April, nearly double the early expectations and a sign of falling demand. Read next: Altcoins: What Is Polkadot (DOT)? Cross-Chain Transfers Of Any Type Of Asset Or Data. A Deeper Look Into Polkadot Protocol | FXMAG.COM Not only consumption is dropping. Industrial output also badly missed estimates with a fall of 2.9% YoY, worse than the 0.5% increase projected. Japanese investors are repatriating investments in China and other places in Asia. The yen's status as a safe currency is mostly seen when there is trouble in its own continent. 2) The wrong yields are rising The second reason for the USD/JPY decline – and the potential for more – comes from the US. The Federal Reserve's aggressive policy of raising interest rates has been positive for the pair, especially as it contrasted with the Bank of Japan's dovish policy. However, there can be too much of a good thing. Read next: (TRX) TRON USD Decentralised Blockchain Platform That Focuses On Entertainment And Content Sharing. Altcoins: A Deep Look Into The TRON Network | FXMAG.COM While short-term Treasury yields continue rising – reflecting expectations for higher inflation and higher borrowing costs – the part that is relevant to USD/JPY is turning south. Returns on 10-year bonds have declined from their peak above 3% as investors begin pricing in growing chances of a recession. Lloyd Blankfein of Goldman Sachs said it is "a very high risk" and that consumers and businesses should get ready. That prophecy may be self-fulfilling. 3) Technical decline Third, the technical tide has turned against the pair. It has begun trading in a downtrend channel, with lower highs and lower lows. Momentum on the 4h-chart has turned negative, the RSI has failed to climb above the 50 level, and the price is capped at the 100-SMA – after falling below the 50-SMA. Read next: Stablecoins In Times Of Crypto Crash. What is Terra (UST)? A Deep Look Into Terra Altcoin. Terra - Leading Decentralised And Open-Source Public Blockchain Protocol | FXMAG.COM Support is at 128.70, which cushioned the pair twice in May. The monthly low of 127.50 is the next level to watch, and it also converges with the 200-SMA. Further down, 126.90 and 126.40 are noteworthy. Resistance is at 1.2950, and then at 130.90. Final thoughts The list above provides ample ammunition for bears, and bulls may need to cling to hopes for further yen-printing from the Bank of Japan – a highly unlikely scenario given the current, already extremely loose monetary policy.
(EUR/USD, EUR/GBP, EUR/CHF) ECBs Hint To Raise Interest Rates Offers Some Relief For The Euro - Good Morning Forex!

(EUR/USD, EUR/GBP, EUR/CHF) ECBs Hint To Raise Interest Rates Offers Some Relief For The Euro - Good Morning Forex!

Rebecca Duthie Rebecca Duthie 16.05.2022 15:13
Summary: Rising of European government bond yields. Despite the Euro’s likelihood to strengthen, market sentiment is still bearish for the EUR/GBP USD continues to show bullish sentiment against the JPY Raised government bond yields allow the EUR some relief The price of the EUR/USD currency pair increased by more than 0.15% on Monday. Market sentiment for the EUR/USD currency pair has turned bullish on Monday. The European Central Banks (ECB) representative, Villeroy, hinted at the possibility of an active summer for the European bond yields, this comes amidst concerns that a weak Euro threatened price stability in the currency bloc. A weak Euro can steer the ECB away from its inflation target. The possibility of raising interest rates from the ECB is likely to instill investors with confidence in the Euro going forward and in the ECBs determination to fight against rising prices and inflation. EUR/USD Price Chart Read next: (TRX) TRON USD Decentralised Blockchain Platform That Focuses On Entertainment And Content Sharing. Altcoins: A Deep Look Into The TRON Network | FXMAG.COM EUR/GBP showing bearish signals Market sentiment for this currency pair is showing bearish signals. In general the market risk sentiment has soured over the past weeks, investors are still concerned over the lockdowns in China, the war in the Ukraine and rising interest rates at the Federal Reserve Bank. With the UK economy bordering on a recession, and Villeroy’s comments, the Euro is strengthening against the Pound Sterling, after the drop in value mid last week, the recovery is welcome. EUR/GBP Price Chart CHF not keeping up with the EUR The Euro strengthens against the CHF amidst the bullish market sentiment for this currency pair. The volatility in the forex market is felt daily by investors, as investors risk sentiment sours, the value of safe-haven currencies, like the Swiss Franc, usually strengthens. However, investor confidence in the EURO has improved as expectations for the ECB to raise interest rates increase. EUR/CHF Price Chart Read next: Altcoins: What Is Polkadot (DOT)? Cross-Chain Transfers Of Any Type Of Asset Or Data. A Deeper Look Into Polkadot Protocol | FXMAG.COM USD/JPY bullish The market sentiment for this currency pair is showing bullish signals. Despite the bullish signals, the JPY has gained on the USD on Monday. As the hawkish Fed continues, it is likely that the sentiment will remain bullish for this currency pair. If there are to be bearish signals for the pair, they are likely to be short lived if the Bank of Japan (BoJ) continue with their dovish monetary policy. USD/JPY Price Chart Sources: Finance.yahoo.com, poundsterlinglive.com, dailyfx.com
Thursday's Bank's of England decision may be record-breaking!

GBP/USD - British Pound Finally Shows Its Potential, But US Dollar Can Be Supported By Fed Shortly. USD/JPY Is Likely To Become A "Boring" Battle, Gold Price (XAUUSD) Looks Like It Can't Get Any Higher | Orbex

Jing Ren Jing Ren 18.05.2022 09:33
GBPUSD tests daily resistance The pound surged after the UK saw a jump in average earnings over the past three months. Solid bullish momentum above 1.2400 has prompted sellers to cover their positions, exacerbating volatility in the process. The daily resistance at 1.2640 coincides with the 30-day moving average and is an important supply zone. Its breach could pave the way for a bullish reversal in the weeks to come. In the meantime, an overbought RSI may cause a pullback as intraday buyers take profit. 1.2310 is the closest support. Read next: Altcoins: What Is Monero? Explaining XMR. Untraceable Cryptocurrency!? | FXMAG.COM USDJPY enters narrowing consolidation The yen recouped some losses after Japan’s GDP growth beat expectations in Q1. The US dollar is taking a breather after a prolonged rally. The latest retreat has found support at 127.50 over the 30-day moving average. Medium-term sentiment would stay upbeat as long as the price remains above this demand zone. 130.80 from a previously faded rebound is a key resistance and a bullish breakout could resume the rally towards 133.00. 128.70 is the immediate support for the current consolidation. Follow us on Google News! XAUUSD tests critical floor Gold inched higher as the US dollar index pulled back from a two-decade high. The price action has stabilised near January’s lows at 1790. A bullish RSI divergence indicates a loss of bearish momentum in this critical demand area, triggering a buy-the-dip behaviour. Sellers’ profit-taking could drive the precious metal higher. A bounce above 1858 may trigger an even broader short-covering. On the downside, a fall below 1790 would send the price into bearish territory with December’s lows (1750) as the next stop. Read next: Altcoins: What Is Polkadot (DOT)? Cross-Chain Transfers Of Any Type Of Asset Or Data. A Deeper Look Into Polkadot Protocol | FXMAG.COM
Steel majors invest in green steel, but change might be driven by contenders

US dollar falls as risk sentiment rises | Oanda

Jeffrey Halley Jeffrey Halley 18.05.2022 16:05
US dollar retreats on higher risk appetite The US dollar weakened overnight despite US yields moving higher and hawkish Fed officials. Like equity markets, currency markets concentrated on positive US data, and a fall in oil prices which lifted risk-seeking sentiment, although I believe this is all part of a bull market correction. The dollar index slumped by 0.85% to 103.30, edging higher to 103.40 in Asia as US index futures fell. Resistance remains at 105.00, and the daily close below 104.00 suggests support at 102.50 could be tested. Failure suggests a deeper correction still. EUR/USD was one of the main beneficiaries of the swing in risk sentiment, jumping 1.15% to 1.0555 before edging lower to 1.0535 in Asia. Having based at 1.0350 on Friday, EUR/USD has rallied through 1.0500 overnight and could test 1.0650 and possibly even the 1.0800 37-year breakout line. I continue to believe that any rally above 1.0700 will be hard to sustain in the medium term. In a similar vein, GBP/USD has traced out a low at 1.2155 last week and leapt 1.40% higher to 1.2490 overnight, where it remains in Asia. The next resistance is at 1.2650; however, like Europe, the United Kingdom’s structural headwinds leave the longer-term picture still bearish. The rise in US yields overnight has left USD/JPY trading sideways at 129.20 in Asia, barely changed over the past few days. If US yields remain at these levels, a deeper correction to 127.00 becomes unlikely. In the bigger picture, USD/JPY remains at the mercy of the US/Japan rate differential. The rally in global sentiment has allowed AUD/USD and NZD/USD to book 0.85% gains once again overnight, rising to 0.7030 and 0.6360 respectively, where they remain in Asia. Any rally to 0.7200 or 0.6500 is likely to see sellers lining up though as both will continue to be buffeted by swings in investor sentiment, especially in China. Likewise, Asian currencies had a good night overnight, with CNY, CNH, KRW, and SGD the standout performers. USD/CNY at 6.8000 and USD/CNH at 6.8500 have proved formidable barriers, and if both USD/Yuans remain below these levels, more Asia FX strength is possible. Lower oil prices will also help, but if US yields continue to track higher from here, then the US dollar correction versus Asia is likely to quickly run out of steam. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Market Trends and Currency Positioning: USD Net Short Position, Euro and Pound Analysis - 22.08.2023

(EUR/USD, EUR/GBP) Market Participants Betting On A More Hawkish ECB, A Dovish BoJ Weighs On The Safe-Haven Currency (USD/JPY) - Good Morning Forex!

Rebecca Duthie Rebecca Duthie 19.05.2022 12:39
Summary: The market sentiment for the EUR/USD currency pair turns mixed. Inflation and economic data weighing on the GBP. BoJ continues to fight rising interest rates. AUD strengthens amidst favourable unemployment data. The market seems to be favouring the Euro for a change The market is signalling mixed market sentiment for this currency pair. The U.S dollar lost ground to the EUR during Thursdays early trading, however, the demand for the safe-haven asset remains steady due to investor risk sentiment still being fragile. Earlier this week the Fed announced they would push interest rates as high as necessary to fight the surging inflation. On Thursday the market is waiting for the minutes from the latest European Central Bank (ECB) meeting to be released, hoping there will be an indication of a tightening in monetary policy. Read next: (EUR/USD) Hopes Of A Hawkish ECB Shows Favour To The Euro, (EUR/GBP) UK CPI Inflation Data Knocks The Pound Sterling - Good Morning Forex!  This begs the question: despite the Fed's already hawkish monetary policy, why is the market not pricing in much for the hawkish Fed, but pricing in a lot for the European Central Bank (ECB) ? EUR/USD Price Chart BoE and ECB expected to raise interest rates The market is reflecting a mixed market sentiment on Thursday. Earlier in the trading week, UK economic data releases weighted on the value of the Pound Sterling, global investor sentiment and the current equity bear market are both aspects that could mean further losses for the GBP. Earlier on in the trading week, the GBP gained on both the Euro and the US Dollar, but a midweek sentiment turn around has bought the Pound Sterling back down. Both the ECB and the Bank of England (BOE) are expected to raise interest rates. EUR/GBP Price Chart Follow FXMAG.COM on Google News! USD continues to beat the JPY The Japanese yen seems to be an underperformer in the past week, perhaps this is due to the rising U.S yields by the Fed amidst the Bank of Japan (BoJ) fighting against tightening their monetary policy. Should the market face a big risk-off sentiment, the JPY might see some gains, however in this currency pair, it may not be noticeable due to the USD also being seen as a safe-haven currency. USD/JPY Price Chart AUD regains some investor confidence Market sentiment for this currency pair is bullish. Investor confidence has increased in the Australian Dollar after the unemployment rate for April came in at 3.9% which not only exceeded market expectations but is also the lowest rate since the 1970s. AUD/JPY Price Chart Read next: (EUR/USD, EUR/GBP) Euro Strengthens In The Wake Of Villeroys Comments On Monday, (AUD/JPY), (GBP/USD) Pound Sterling Showing Strength - Good Morning Forex!   Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com
Rates Reversal: US Long Yields on the Rise as Curve Dis-Inverts

Is the yen making a comeback? | Oanda

Kenny Fisher Kenny Fisher 20.05.2022 18:14
After a brutal slide over the past two months, the Japanese yen is showing some bounce in its step. Japanese yen bounces back The yen registered 10 straight losing weeks but finally ended that nasty streak last week, with gains of about one per cent. Barring any surprises today, the yen will repeat with another strong week. On Thursday, USD/JPY dropped to 127.02, its lowest level since late April. Has the yen turned the corner? The US dollar pummelled the yen in the months of March and April, and earlier this month USD/JPY touched 131.34, its highest level in some 20 years. The yen’s descent was rapid and drew warnings from the BoJ and Japan’s Ministry of Finance. There was speculation that the exchange rate was nearing an unknown ‘line in the sand’, which if breached, would trigger an intervention to prop up the yen (clearly, 130 was not that line in the sand). The yen’s movement is largely dependent on the US/Japan rate differential. With the BoJ showing no hesitation to intervene in order to defend its yield curve, the yen has been at the mercy of the direction of US yields. Over the past few months, yields have been generally going up, which has pushed the yen sharply lower. The Federal Reserve remains in aggressive mode, but with concerns of stagflation and a possible recession, the Fed may have to ease up on the pace and size of its rate hikes, which would weigh on US yields, thus boosting the yen. The recent turbulence in the stock markets, which has seen equities fall sharply, has benefited the yen, which traditionally acts as a safe-haven asset. The yen may have flexed some muscle, but I would still consider yen risk tilted to the downside. The US economy remains in good shape, and the US dollar is also a safe-haven asset. If the Ukraine war continues to cause increases in energy and food prices, risk appetite would fall and investors would likely flock to the safety of the US dollar. . USD/JPY Technical USD/JPY is testing resistance at 1.2938, followed by resistance at 1.3123 There is support at 1.3000 and 1.2918 This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
ECB's Dovish Shift: Markets Anticipate Softer Policy Guidance

Can Japanese Yen Finally Go Up!? US Dollar To Japanese Yen (USD/JPY) – Head and shoulders breakout? | Oanda

Craig Erlam Craig Erlam 24.05.2022 20:03
Major correction on the cards? The rally in USDJPY from early March to early May was huge, driven by a combination of a soaring greenback and a BoJ determined to support its yield curve control policy tool. But the last couple of weeks have brought some relief in the pair, driven primarily by the dollar paring gains against the broader market. And the pair may have just broken below an interesting technical support level that could signal a more significant correction. A head and shoulders appears to have formed over the last month and the break of the neckline is potentially in progress. This also comes immediately following the break of the 200/233-period SMA band on the 4-hour chart which did provide support for most of the last week before finally giving way. Read next: Altcoins: Ripple Crypto - What Is Ripple (XRP)? Price Of XRP | FXMAG.COM If this breakout holds, it could potentially point to quite a significant correction based on the size of the head and shoulders formation and the projections that could indicate. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Sunrun's Path to Recovery: Analysts Place Bets on High Growth Amidst Renewable Energy Challenges

Japanese yen rises on strong BoJ CPI | Oanda

Kenny Fisher Kenny Fisher 24.05.2022 23:25
After several days of trading sideways, the yen has posted strong gains on Tuesday. In the North American session, USD/JPY is trading at 126.58, down 1.02% on the day. The yen is currently trading at its highest level in five weeks. BoJ CPI stronger than expected The Bank of Japan’s preferred inflation gauge, BoJ CPI, surprised the markets with a gain of 1.4% in April, higher than the consensus estimate of 1.0%. The index was up from 1.1% in March and is reflective of inflation moving higher. Of course, Japan is not facing the surging inflation which has hit the US, UK and other developed economies, but it is a significant change nonetheless, after years of deflation. Japan’s CPI excluding fresh food is expected to remain above 2%, which is the BoJ’s inflation target. Read next: Altcoins: What Is Monero? Explaining XMR. Untraceable Cryptocurrency!? | FXMAG.COM While other major central banks have tightened policy in response to spiralling inflation, the BoJ continues to insist that cost-push inflation will ease. The Bank has tenaciously defended its yield curve control, maintaining that ultra-low rates are critical in order to support the fragile economy. The BoJ has not hesitated to intervene in order to cap JGB rates but has not made any moves to prop up the yen, which hit 20-year lows earlier this month. The yen may have flexed some muscles, but I would still consider yen risk tilted to the downside. The US economy remains in good shape, and the US dollar is also a safe-haven asset. If the Ukraine war continues to cause increases in energy and food prices, risk appetite would fall and investors would likely flock to the safety of the US dollar. The yen is at the mercy of US yields, which have generally been on an upswing over the past few months, pushing the yen sharply low. USD/JPY Technical USD/JPY has broken below support at 1.2759 and 1.2672. Below, there is support at 1.2550 There is resistance at 1.2825. Above, 1.2947 is protecting the 130 level   This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Follow FXMAG.COM on Google News
Video: A Wide Range Of Forex Pairs AUD/USD, USD/JPY, EUR/JPY, EUR/USD And GBP/USD Analysed By Jason Sen (DayTradeIdeas)

Video: A Wide Range Of Forex Pairs AUD/USD, USD/JPY, EUR/JPY, EUR/USD And GBP/USD Analysed By Jason Sen (DayTradeIdeas)

Jason Sen Jason Sen 30.05.2022 07:45
AUDUSD finally tests very strong resistance at 7135/55. Shorts need stops above 7175. A break higher this week is a buy signal targeting 7230/50. Shorts need stops above 7275. Shorts at 7135/55 target 7090 then 7060/50. Further losses test support at 7020/10. Longs need stops below 7000. USDJPY shorts at resistance is at 127.50/70 need stops above 127.80. A break higher is a buy signal targeting 128.20/30, perhaps as far as strong resistance at 128.70/90. Holding resistance is at 127.50/70 targets 127.20/00. A break below 126.80 targets 126.30/20 & eventually 125.80. EURJPY holding strong resistance at 136.50/70 (perfectly on Thursday & Friday) targets 135.60/50 for profit taking on shorts. Further losses target 135.35/25. If we continue lower look for 134.65/55 then strong support at 134.20/00 for profit taking on any shorts. We should have strong resistance again at 136.50/70. Shorts need stops above 136.95. A break higher targets 137.20/30 then 138.00/20. Read next: Altcoins: Tether (USDT), What Is It? - A Deeper Look Into The Tether Blockchain| FXMAG.COM EURUSD longs at support at 1.0670/50 start to work on the bounce towards strong resistance at 1.0800/20 for profit taking. Shorts need stops above 1.0835. Support again at 1.0670/55. Longs need stops below 1.0640. Strong support at 1.0600/1.0590. GBPUSD made a high for the day 6 pips above strong resistance at 1.2640/60. Shorts need stops above 1.2680. A break higher this week is a buy signal initially targeting 1.2725/45. Shorts at 1.2640/60 target 1.2590, perhaps as far as 1.2555/45 for profit taking. To subscribe to this report please visit daytradeideas.co.uk or email jason@daytradeideas.co.uk Follow FXMAG.COM on Google News
The Commodities Feed: OPEC+ meeting ahead

Crude Oil Is Said To Shape Euro To US Dollar (EUR/USD). Forex Cable (GBP/USD) May Be Supported By BoE Sooner Than Later. (USD/JPY) - Can Japanese Yen Rise? | Oanda

Jeffrey Halley Jeffrey Halley 30.05.2022 13:22
Still improving risk sentiment sends US dollar lower The US dollar declined once again on Friday as improving risk sentiment continues to unwind the 2022 US dollar rally. That has spilt over into Asian markets today, with regional currencies booking some decent gains versus the greenback this morning. On Friday, the dollar index edged 0.12% lower to 101.64, losing another 0.13% to 101.50 in Asia. Support remains at 101.00, with resistance at 102.50. EUR/USD EUR/USD held steady on Friday, closing almost unchanged at 1.0735, with US dollar weakness being reflected in EMFX and the commonwealth currencies. It has gained 0.20% to 1.0755 in Asia, but overall, seems locked in a 1.0700 to 1.0800 range. Oil’s rally may temper single currency gains, with the multi-decade breakout line, today at 1.0830, still a formidable barrier. Read next: Altcoins: What Is Monero? Explaining XMR. Untraceable Cryptocurrency!? | FXMAG.COM GBP/USD GBP/USD closed 0.20% higher at 1.2630 on Friday, adding another 0.14% to 1.2640 in Asia. GBP/USD looks set to trade in a noisy 1.2600 to 1.2700 range as the week gets underway. The government’s cost of living package may prompt faster BOE tightening, supporting the downside, while the economic slowdown continues to slow upside progress. USD/JPY USD/JPY is trading sideways, ranging each side of 127.00 as US yields trade in narrow ranges. That is likely to continue with US bond markets closed today. The chart suggests USD/JPY has further downside potential that could target 125.00. Only a move through trendline resistance at 127.80 changes the picture. AUD/USD & NZD/USD AUD/USD and NZD/USD continue to be driven entirely by swings in global risk sentiment. Another strong performance by Wall Street on Friday maintained that upward momentum and both AUD and NZD were prime beneficiaries. AUD/USD rallied by 0.85% to 0.7160, adding another 0.20% to 0.7175 today. It has resistance at 0.7260, and support at 0.7100. NZD/USD rose by 0.86% to 0.6536 on Friday, rising another 0.17% to 0.6547 today. Resistance nearby at 0.6570 opens a larger rally to 0.6650, with support at 0.6475. Read next: Altcoins: Cardano (ADA) What Is It? - A Deeper Look Into Cardano (ADA) | FXMAG.COM Asian FX rode improving investor risk sentiment higher on Friday, moves reflected throughout the EM space. Gains were led by the Chinese yuan, Korean won, and New Taiwan dollar, all gaining around 0.70%, while even the beleaguered Malaysian ringgit out in a good show, USD/MYR falling to 4.3770. Both the Indonesian rupiah and the Malaysian ringgit should find further strength on higher oil prices, even though it increases their domestic subsidy bills. Oil’s strength is likely the reason the Indian rupee has remained unchanged from Friday through today. CNY, KRW and NTD are rallying strongly today, likely boosted by China’s reopening hopes. USD/CNY, USD/KRW, and USD/NTD have fallen by around 0.80% today. However, if oil prices continue to rise this week, the rally in energy-importing Asian currencies may run out of steam. Follow FXMAG.COM on Google News This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Market Update: UK Inflation Softens, US Stocks Rally, Bank Earnings, and AI Dominate Headlines

Shocking Forex Rates!? EUR/USD Decreased A Little Bit, So Does British Pound (GBP) And AUD/USD. USD/JPY (US Dollar To Japanese Yen) Showed Decent Performance | Oanda

Jeffrey Halley Jeffrey Halley 06.06.2022 16:23
US dollar pares gains from NFP report Friday’s higher Non-Farm Payroll data saw the US dollar reverse much of its losses from Thursday, characterising a very choppy back-and-forth week last week. The dollar index rose by 0.40% to 1.0217, leaving the index slightly higher for the week. Notably, the rally was not enough to lift the index above its 102.35 pivot point, suggesting that the downside remains the path of least resistance still. Support/resistance lies at 101.30 and 102.70. In Asia, the China reopening trade has pushed the index slightly lower to 102.11.  US dollar eases lower in Asia - MarketPulseMarketPulse EUR/USD fell only slightly by 0.27% to 1.0720 on Friday post-data, where it remains in Asia. ​ Resistance between 1.0770 and 1.0830 remains a formidable barrier, with support at 1.0650. However, the single currency continues to show resilience at these levels, and resistance could be seriously tested if China’s reopening trade continues to support risk sentiment. Volumes will be impacted by European holidays today.   Sterling tumbled by 0.70% to 1.2490 on Friday in yet another whipsaw session. It remains there in Asia today. It has support/resistance at 1.2460 and 1.2670. A UK leadership challenge this week may serve to limit gains but a clean break of 1.2670 opens a potentially larger rally to 1.2800 and 1.3000, while the failure of 1.2460 could see sterling fall to 1.2400.   USD/JPY rose 0.73% to 130.85 on Friday, accounting for most of the dollar index gains post US data as US bond yields firmed slightly. USD/JPY has edged 0.15% lower to 130.65 today despite dovish BOJ comments, but the US/Japan rate differential should continue to support the downside unless US yields suddenly fall sharply. It has support at 129.00 and resistance at 131.00, a double top, and 131.30.   AUD/USD fell post US data as risk sentiment turned south. It finished 0.80% lower at 0.7205, easing another 0.20% to 0.7195 in Asia. AUD/USD has nearby support at 0.7180, an ascending one-month trendline, with resistance between its 50/100/200-day moving averages (DMAs) between 0.7225 and 0.7255. RBA hiking concerns ahead of tomorrow’s RBA meeting look set to limit gains in the short term.   USD/Asia moved higher on Friday on firm US data, with the Korean won, New Taiwan dollar, Singapore dollar, and India rupee the main losers, being favourites by fast-money to express risk sentiment of late. Yuan trading was impacted by a China holiday. Markets are quiet in Asia today, with Asian currencies booking only small gains versus the greenback. The sharp rise in oil prices on Friday, which continues in Asian trading today, is likely limiting Asia FX gains. The double-edged sword of China’s reopening is that oil prices are likely to remain firm as well as demand returns. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
The Potential Impact of Inflation Trends on the AUD and RBA's Rate Decisions

(JPY) Japenese Yen Hasn't Shocked Markets (Yet?), What Does It Mean For USD/JPY? | Oanda

Kenny Fisher Kenny Fisher 06.06.2022 23:37
The Japanese yen has started the week quietly. In the European session, USD/JPY is trading at 130.63, up 0.15% on the day. Yen steadies after slide - MarketPulseMarketPulse It was a week to forget for the yen, as USD/JPY surged 2.91%, the biggest weekly gain this year. The driver of the yen’s downswing was primarily the rise in US bond yields, which have started the week with gains and are closing in on the 3% level. US yields climbed on Friday after the May nonfarm payrolls were stronger than expected. The economy added 390 thousand jobs, above the forecast of 325 thousand and indicating that the labour market remains robust. The report has solidified expectations that the Fed will deliver 50-bps hikes at the June and July meetings. Ahead of the NFP release, Fed members were sending out hawkish messages to the markets. On Thursday, Fed Vice Chair Brainard said the Fed should not take a break from rate hikes in September, and that the Fed might continue with 50-bps hikes if inflation doesn’t peak. What makes Brainard’s comments noteworthy is that she is considered a leading dove on the Fed, which is indicative of the hawkish pivot the Fed has taken as inflation continues to accelerate. Echoing Brainard, Fed member Mester said that the Fed had to act aggressively to contain inflation and that could mean an increase in September.   BoJ’s Kuroda dismisses tightening With the Japanese yen declining in health and trading above 130 to the dollar, there has been talk that the BoJ might intervene in order to prop up the currency. BoJ Governor Kuroda poured cold water on any such expectations on Monday, stating that monetary tightening was not “suitable”. Kuroda said that the economy was still recovering from Covid and high commodity prices were adding pressure on the economy. He added that the BoJ would adhere to its ultra-loose policy until the Bank achieved its inflation target of 2%. With Kuroda doubling down on the Bank’s accommodative policy, the risk for the yen is clearly tilted to the downside, barring a decline in US Treasury yields. . USD/JPY Technical USD/JPY faces resistance at 1.3124 and 1.3226 There is support at 129.56 and 128.14 This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Market Trends and Currency Positioning: USD Net Short Position, Euro and Pound Analysis - 22.08.2023

What. A. Plunge! Japanese Yen (JPY) Has Reached 20-Year Low! Let's Have A Look At USD/JPY Chart

Kenny Fisher Kenny Fisher 07.06.2022 18:55
Dollar continues to pummel yen The Japanese yen continues to lose ground. USD/JPY touched the 133 line earlier in the day, as the yen hit a 20-year low. In the North American session, USD/JPY is trading at 132.55, up 0.50% on the day. The dollar index rose as much as 0.39% today and hit its highest level since May 23rd, before giving up these gains. The sharp descent of the yen can be attributed to two factors. First, US Treasury yields are moving higher, and on Tuesday, the 5, 10 and 30-year yields are now above the 3 per cent level. The upward move in US yields could be related to this week’s USD 96 billion in government bond sales in the 3, 10 and 30-year tenors. The dollar has momentum and if Treasury yields remain above 3% and Friday’s US CPI print is high, USD/JPY should respond with further gains. The second factor weighing on the yen is the Bank of Japan’s ultra-accommodative policy. BoJ Governor Kuroda said on Monday that monetary tightening was “not suitable and that the central bank would maintain its ultra-loose policy until the Bank achieved its inflation target of 2.0%. The BoJ has been quick to intervene to defend its yield curve, purchasing JGBs in order to cap yields on 10-year bonds at 0.25%. There has been speculation that the BoJ has a ‘line in the sand’ at which it would intervene to prop up the yen, but the yen continues to fall and touched 133 today with no signs that the BoJ is planning to step in. It should be remembered that Kuroda has stated on more than one occasion that a weak yen is mostly positive for the economy. In addition, surging oil prices are pressuring the yen, as crude oil is priced in US dollars. With US rates moving higher and the BoJ keeping a cap on JGB yields, the US/Japan rate differential continues to widen, and the risk to the yen remains tilted to the downside. . USD/JPY Technical USD/JPY is testing resistance at 1.3226. Above, there is resistance at 1.3368 There is support at 131.24 and 129.56   This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Japanese yen falls to 20-year low - MarketPulseMarketPulse
FX Talking - Summer of discontent keeps dollar in demand | EUR/USD | USD/JPY | GBP/USD | ING Economics

FX Talking - Summer of discontent keeps dollar in demand | EUR/USD | USD/JPY | GBP/USD | ING Economics

ING Economics ING Economics 14.06.2022 10:04
The global economy can now be characterised as one in which many central bankers are poised to hike rates more forcefully, even as growth prospects are being revised lower. Investors are now having to ask which economies can best withstand these tighter monetary conditions and which currency to back? During this summer of discontent the answer to these questions largely remains the US economy and the dollar. Unlike the supply-driven inflation suffered in Europe, price rises in the US are far more a function of demand-side factors and suggest stagflation is less of a likelihood in the US than in Europe. And with no end in sight to tight energy markets, the US remains better positioned here too. We expect the Fed to deliver at least another 175bp of hikes this year as the Fed drives real US interest rates into restrictive territory. This is not good news for global growth – but that is the point, the Fed needs to slow demand. Flatter yield curves consistent with the latter stages of the US business cycle are normally good news for the dollar. In all this means that the dollar should stay bid this summer (1.00/1.02 is possible in EUR/USD), while USD/JPY in the 135/140 region looks ready to trigger Japanese intervention. GBP/USD can move to the low 1.20s as the BoE cycle is repriced lower and the CHF should start to outperform in Europe as the SNB guides it higher. CEE FX has become more mixed. We still favour the PLN, but HUF and now CZK look more vulnerable. This will be a fragile environment for most EMFX – especially those most exposed to China. Here USD/CNY can still push higher taking most of $/Asia with it. Developed markets EUR/USD A long, hot summer for the euro Current spot: 1.0476 Both the Fed and the ECB are in hawkish mode – both battling inflation near 8%. Both are probably happy with stronger currencies. The difference is the stagflationary shock from the war in Ukraine which makes the ECB unlikely to deliver on the 150bp of tightening priced in. There is also the issue of growth differentials and what they mean for international equity flows. These could start generating some euro under-performance. EUR/USD looks biased towards the lower end of a 1.02-1.08 range this summer. It looks far too early to pick the top in the Fed cycle. Higher US real rates also spell trouble for risk assets, including EM in general. This will also lend further support to the dollar USD/JPY Official concern and stretched valuations may help JPY Current spot: 134.43 The combination of aggressive Fed tightening (we look for at least another 175bp of Fed rate hikes this year), high energy prices and BoJ dovishness has sent USD/JPY to 135. Japanese officials are now officially unhappy with the rapid pace of JPY weakness. Sensible arguments go that the BoJ cannot intervene to sell $/JPY since: a) markets are not disorderly and b) BoJ is still printing money with QQE. Yet intervention is political & one never knows whether deals get cut behind the scenes We cannot rule out USD/JPY marching towards 140 given that this is a fundamentally driven, but intervention signals are flashing amber/red. Traded USD/JPY volatility can rise further. GBP/USD Bank of England tightening expectations are extreme Current spot: 134.43 GBP/USD looks as though it can trade back down to the 1.21/22 levels – largely on the back of dollar strength. But certainly an Unexploded Bomb (UXB) for sterling is the incredibly aggressive 175bp of tightening priced into the BoE cycle for year-end. This seems very extreme given that not all the MPC were on board with May’s 25bp hike. The 16 June BoE meeting is an event risk. UK growth will struggle in 2Q, although there is increasing speculation over tax cuts coming through this Autumn – in a bid to shore up Conservative support ahead of a possible ‘23 election. We doubt a Tory leadership change or Brexit tension has too much impact on sterling – a lot of bad news is already priced. Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more This article is a part of the report by ING: Source
Rising U.S. Treasury Bond Yields Have Helped The USD/JPY Bulls

Let's Have A Look At USD/JPY Chart. Japanese Yen falls back down after BoJ (Bank Of Japan) balks | Oanda

Jeffrey Halley Jeffrey Halley 17.06.2022 13:38
The Japanese yen continues to post strong swings this week and is up sharply on Friday. USD/JPY is trading at 134.67 in Europe, up 1.86% on the day. BoJ maintains yield curve control It’s been a busy week, with the markets still digesting some dramatic moves by central banks. The Fed and SNB delivered massive salvos in their fight against inflation, and the BoE continues to tighten, albeit at a more modest pace. The week wrapped up with the Bank of Japan policy decision earlier in the day. These meetings are usually on the dull side, with the central bank merely reaffirming its ultra-loose policy, with the occasional tweak. Today’s meeting was closely watched, however, as the BOJ’s yield curve stance has been under pressure and there was speculation that the BoJ might retreat and release the cap of 0.25% on 10-year JGBs. In the end, the BoJ did not blink or budge, maintaining its policy for yield curve control and QE. The BOJ reaffirmed it will continue its policy of rock-bottom rates, even though other major central banks are tightening policy, as we saw this week with the Fed, BOE and SNB. Governor Kuroda has insisted that monetary easing remain in place, given Japan’s slow recovery from the Covid-19 pandemic. With inflation barely at 2%, the central bank’s target, Kuroda can afford to continue his loose policy and tenaciously defend the BoJ’s yield curve. The BoJ didn’t adjust policy today but it was noteworthy that the policy statement added the exchange rate to its list of risks, something we haven’t seen in previous statements. The yen hit a 24-year low at 135.60 earlier this week and could fall even further. The Bank is sending a message that it is monitoring the exchange rate, but I question whether this will deter the markets from continuing to test the yen – previous jawboning from the BoJ and Ministry of Finance didn’t succeed in stemming the yen’s slide, and we could well be on our way to a 140 yen if the US/Japan rate differential continues to widen. . USD/JPY Technical USD/JPY is testing resistance at 133.14. Above, there is resistance at 1.3585 There is support at 131.72 This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Yen falls back down after BoJ balks - MarketPulseMarketPulse
Market Trends and Currency Positioning: USD Net Short Position, Euro and Pound Analysis - 22.08.2023

Is USD Going To Outperform Euro And JPY!? Let's Take A Look At EUR/USD & USD/JPY. | Oanda

Jeffrey Halley Jeffrey Halley 20.06.2022 16:34
Dollar in choppy waters The US dollar held onto its intraday gains on Friday, as US bond inflows seemed to support it as investors preferred safety over risk into the weekend and today’s US holiday. With the weekend being relatively uneventful, the US dollar has eased in Asia, but overall continues a pattern of choppy range trading. The dollar index rose 0.82% to 104.65 on Friday, thanks mostly to a weak yen. In Asia, it has eased 0.26% to 104.38. The dollar index has support at 1.0350 with resistance now distant at 1.0570.   EUR/USD eased by 0.56% to 1.0495 on Friday in another 100-point session, climbing by 0.31% to 1.0525 in Asia as weekend hedges are taken off. Dutch natural gas futures prices remain elevated, so the single currency is not receiving much of a boost from last Friday’s oil retreat. It has initial resistance at 1.0600, with challenging resistance at 1.0650. Support is at 1.0450 and 1.0400 now although I note that EUR/USD has based twice at 1.0350. That leaves the door open slightly to a corrective recovery this week.   Sterling has another awful day as its economic picture darkens, falling by 1.10% to 1.2215 on Friday, edging 0.22% higher to 1.2240 in Asia. ​ GBP/USD has initial resistance at 1.2400 and 1.2500, with support at 1.2200 and then 1.1950.   USD/JPY powered higher on Friday as the Bank of Japan left monetary policy unchanged and continues to heavily intervene to cap ultra-low JGB yields. With Japan’s inflation only expected to hit 2.50% this Friday, I can’t really blame them, but with the US, Switzerland, the United Kingdom, et al hiking, the interest rate differential continues to power USD/JPY higher. USD/JPY leapt 2.10% higher to 135.00 on Friday, with last week’s 131.50 low a distant memory and a bargain for somebody. Having probed 135.45 today, USD/JPY has eased back to 134.85 this morning, as commodity prices fell. It is likely to be only a respite though unless US yields move sharply lower this week. USD/JPY has resistance at 135.60 with support distant at 132.20.   Swings in investor sentiment continue to generate all the two-way volatility in the Australian and New Zealand dollars. AUD/USD fell 1.60% on Friday to 0.6935 before rising to 0.6955 in Asia. NZD/USD fell 0.80% to 0.6315 on Friday before rising to 0.6330 in Asia. A US holiday is dampening volumes but both Australasians have traced out bottoming patterns on the charts. As long as 0.6850 and 0.6200 hold respectively, further gains to 0.7150 and 0.6450 cannot be ruled out.   On a 24-hour basis, Asian currencies are mostly unchanged today after the losses on Friday and were mostly unwound this morning. The main reason has been a rally by China’s CNY and CNH after the PBOC left both the 1 and 5-year LPRs unchanged. USD/CNY has fallen 0.60% to 6.6760, while USD/CNH has fallen by 0.50% to 6.6745, dragging USD/Asia lower. Although the KRW, INR, MYR, THB, and IDR look the most vulnerable and remain near last week’s lows, a US holiday today should mean range-trading continues into Wednesday. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. US dollar remains firm but choppy - MarketPulseMarketPulse
Rising U.S. Treasury Bond Yields Have Helped The USD/JPY Bulls

FX: Tempting Japanese Yen! Technical Update - USDJPY testing strong resistance, can it close above? | Saxo Bank

Kim Cramer Larsson Kim Cramer Larsson 21.06.2022 22:37
USDJPY experienced a ”Flash correction” Thursday before bouncing back strongly and has now broken above resistance at 135.60. There is still divergence on RSI, but trend is up and remember the trend is your friend.To reverse the bullish picture USDJPY needs to break below 131.40. Source: Saxo Group USDJPY is testing its strong resistance around 136. A cluster of resistance/projection levels are placed around this level.It was the peak in January 2002, it is 1.382 Fibonacci projection of the Symmetrical Triangle break out, and if you take the peak to bottom of the Triangle and add that difference to the break-out price (illustrated by the two vertical arrows). If USDJPY can close the day above 136.20 there could very well be more upside potential. However, RSI (Relative Strength Index) has reached and exceeded the value level it did at the peak before USDJPY started forming the corrective Triangle pattern in June 2015.Going back 30 years every time, the RSI has reached values around 80 a larger correction has set in. At the time of writing, Monthly RSI is above 84.However, the two other times where RSI was close to 80 the correction did not occur before divergence had been recorded. There is currently no divergence on RSI during this uptrend i.e., we could see another leg higher after a quite possible minor downward correction.An exhaustive move higher could reach 142-147.  Keep an eye on RSI, if it breaks its steep rising trend line it could be a strong indication of a correction. Source: Saxo Group Source: Technical Update - USDJPY testing strong resistance, can it close above? | Saxo Group (home.saxo)
FX: Can USD/JPY Hit 150!? How Weak Will Japanese Yen (JPY) Get? US Dollar (USD) - Where Is The Limit? | FxPro

FX: Can USD/JPY Hit 150!? How Weak Will Japanese Yen (JPY) Get? US Dollar (USD) - Where Is The Limit? | FxPro

Alex Kuptsikevich Alex Kuptsikevich 22.06.2022 15:15
The Japanese yen leads in losses against the dollar amongst the G10 currencies. And so far, there are indications that the USDJPY’s rising trend will only be interrupted by technical corrections in the coming weeks or months. The main fundamental driver for the USDJPY is the substantial divergence in the US and Japanese monetary policy. The former has raised its key rate by 150 points in the last three meetings and started selling assets off the Fed balance sheet. The latter has maintained its crisis rhetoric, promising to continue with QE and increasing bond purchases to keep 10-year yields close to 0.25%. The currency market is not only wagering on the present but is actively putting expectations into prices. From this perspective, the USDJPY exchange rate results from an overlay of the key rate expectations, which are best reflected in 2-year bond yields. The spread started rising steadily in early 2021, at the same time as USDJPY began to rise. The spread between the US and Japanese 2-year yields exceeded 3% this month, reaching 3.5%, the highest since 2007, although it was only 0.25% at the beginning of last year. Approaching a spread of 3% has not stopped the Fed from tightening, nor the Japanese rhetoric, so it makes sense to tune in to a return to pre-World Financial Crisis norms, i.e., above 4.3% versus 3.2% now, leaving the potential for around a third of the movement that already passed. If these correlations between the USDJPY and USDJPY 2-year yield spreads remain in place, we could see the USDJPY continue to rise to 150 yen, last seen in 1990 and twice as high as the historic lows of 2011. Suppose the Japanese monetary authorities and the Ministry of Finance manage to steer the yen through such a devaluation, preserving confidence in the financial system. In that case, this could revive the economy by raising export competitiveness, potentially returning the Land of the Rising Sun to export-oriented status.
Rising U.S. Treasury Bond Yields Have Helped The USD/JPY Bulls

Japanese yen eyes inflation report | Oanda

Kenny Fisher Kenny Fisher 23.06.2022 15:15
The Japanese yen is in positive territory today, extending its gains from yesterday. USD/JPY is trading at 135.46 in the European session, down 0.56% on the day. Yen rises as US yields dip The yen has gained a bit of strength as USD/JPY is back below 136.00, after rising close to 136.71 earlier in the week, its highest level since September 1998. The yen received a reprieve from its recent slide due to a drop yesterday in US Treasury yields, rather than any newfound strength related to the yen. This is another indication that USD/JPY movement is at the mercy of the US/Japan rate differential, with the Bank of Japan holding firm on its yield cap for JGBs. The BoJ is not showing any signs of adjusting its ultra-accommodative policy, leaving the yen to bear the brunt of this inflexible stance. As a result, the yen has been pummelled by the US dollar, with the yen plunging some 17% in 2022. The BoJ and Japan’s Ministry of Finance have jawboned about the exchange rate, noting their concern. The verbal intervention has clearly not worked, raising the question as to whether Tokyo has a ‘line in the sand’, which if crossed, would trigger intervention in the currency markets to support the ailing yen. There had been speculation that a move above 125.00 or 130.00 could result in a response, but that failed to happen. Currently, there are voices stating that the 140 level is that line in the sand. BoJ Governor Kuroda has insisted that the Bank needs to support Japan’s fragile economy with monetary easing, and has said that the exchange rate is not a policy target. Kuroda has even said that a weak yen has benefits for the economy, such as making exports more attractive. Given this stance, I question whether a 140.00 yen will trigger currency intervention. True, the yen is at 24-year highs, but let’s not forget that USD/JPY has been above 200.00 and even 300.00 in the past, and the BoJ has indicated that the exchange rate is not a priority. . USD/JPY Technical There is resistance at 1.3657 and 1.3814 USD/JPY has support at 1.3404 and 1.3247 This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Japanese yen eyes inflation report - MarketPulseMarketPulse
ECB's Knot: July Rate Hike Necessary, Beyond July Uncertain; Canadian CPI Supports Rates on Hold; Global Crypto Market at $1.2 Trillion; Oil Market Tightens with Russian Shipments Drop and China's Support Measures

Dollar may halt growth, while the collapse of the crypto market will continue (expect a local increase in USD/JPY and XAU/USD) | InstaForex

InstaForex Analysis InstaForex Analysis 28.06.2022 14:23
Relevance up to 09:00 2022-06-30 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. The currency market continues to move in a tight horizontal channel, driven by many factors that balance each other. They prevent the formation of a distinct trend, but since dollar already halted its growth, euro has every chance of rising noticeably in the short term. This is also possible in other currencies pair with dollar. In principle, the reason why the market is like this right now is because dollar is overbought and Treasury bonds eased its sell-offs, leading to the stop of yield growth. Another factor is the rate hikes implemented by world central banks, as well as the impending increase of ECB's cost of borrowing, which reduces the difference in interest rates and supports the exchange rates of currencies traded against dollar. While relative calm has been established in the forex market, the crypto market continues to suffer significant problems, ruining not only holders of bitcoins and other crypto instruments, but also companies. For example, the well-known crypto hedge fund Three Arrows Capital defaulted on a loan in the amount of more than $670 million. Problems in the crypto market arose after the factors supporting it earlier changed dramatically at the beginning of this year. Most likely, if central banks continue to tighten policies and trigger a stagflation, the market will collapse further. This is why many are closely monitoring the data on inflation, as well as business activity indices in Europe and the United States. Forecasts for today:     USD/JPY The pair is trading upwards, thanks to lower market tensions and growing risk appetite. Further increase above 135.55 will bring the pair to 136.65.     XAU/USD Spot gold is consolidating in the range of 1820.30-1845.20. There is a high chance that it will remain trading within these levels until the end of this week.   Read more: https://www.instaforex.eu/forex_analysis/314713
Market Trends and Currency Positioning: USD Net Short Position, Euro and Pound Analysis - 22.08.2023

FX: USD/JPY is growing despite the weakening of the dollar, first target is 136.70

InstaForex Analysis InstaForex Analysis 28.06.2022 16:09
Relevance up to 13:00 2022-06-29 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. The USD/JPY pair is slowly but consistently developing the upward offensive, intending to gain a foothold in the area of the 136th figure. Over the course of three trading days, the price is gradually growing, overcoming intermediate resistance levels. And it looks like this trend will continue in the medium term. The US currency is the main engine of growth for USD/JPY, despite the fact that it is under general background pressure. The US dollar index is stuck in the middle of the 103rd figure after falling from 105.55. That is why the pair is growing rather slowly, with impressive intraday pullbacks.     The demand for the greenback has been falling for two main reasons. First, the market saw signs of a slowdown in inflation growth in the US. The reason for such conclusions was the June index of consumer confidence, which is calculated by the University of Michigan. It collapsed to 50 points, while in May it was at 58.4 points. After this release, the dollar came under pressure, while the S&P 500 index showed the highest increase since May 2020. The second reason for the general weakening of the greenback is the indecisive position of Federal Reserve Chair Jerome Powell regarding the prospects for tightening monetary policy. After all, the above inflation report should be viewed precisely through the prism of the position of Powell, who has not yet decided on the pace of interest rate increases. After his recent speech in Congress, the dollar lost its position, retreating from its reached highs. The de facto dollar rally ended after Powell did not defend the "ultra-hawkish" scenarios. On the one hand, the head of the Fed made it clear that the regulator will maintain a hawkish course, continuing to raise the interest rate until it breaks the inflation growth. But on the other hand, he stressed that "the pace of further rate increases will continue to depend on incoming data and changing economic conditions: the Committee will make a decision from meeting to meeting." This phrase can be interpreted unambiguously: the further pace of monetary tightening will depend on the dynamics of key inflation indicators, such as the consumer price index and PCE. The latest release of the CPI showed that inflation does not even think of slowing down: after a two-month decline, the index resumed its growth again, updating 40-year highs (after this release, the Fed raised the rate by 75 points, provoking a stronger dollar). As for the base price index for personal consumption expenditures in the US (PCE), now we can only use April data, while the report for May will be published on Thursday. Given the market reaction to the consumer confidence index from the University of Michigan, it can be assumed that PCE will provoke increased volatility for all dollar pairs, including USD/JPY. But note that while the greenback in the main pairs of the major group is losing its positions, the USD/JPY pair is slowly but still creeping up. In my opinion, this anomaly is explained by the divergence of the rates of the Fed and the Bank of Japan, which will persist regardless of the degree of Jerome Powell's hawkishness. As you know, the US Federal Reserve is now facing a choice: to raise interest rates in July by 50 or by 75 points. The Japanese regulator does not have such a dilemma: despite the growth of inflation indicators, the Bank of Japan decided to adhere to an accommodative monetary policy—"to support the economy." Moreover, representatives of the Japanese Central Bank, at every opportunity, declare that they are ready to soften the parameters of monetary policy, "if necessary." For this reason, the USD/JPY pair demonstrates an upward trend. The price goes up, albeit with deep corrective pullbacks. If we look at the MN timeframe, we can see that since March the pair has grown by more than 2,000 points. At the same time, there is no consensus in the market on where the pair will eventually end up. In June, the price renewed its 24-year high, so it is quite difficult to talk about any borders and "red lines." For example, according to currency strategists at Societe Generale, the pair will rise first to 138, then to 141. Westpac economists expect the pair to reach 137 in the near term. In turn, Rabobank experts say that there is a high probability that the pair will reach 140 in the short term. In my opinion, in the foreseeable future, it is necessary to consider more mundane targets. The first of them is 136.72 (a 24-year high, which was updated on June 22). The main target (in the medium term) is 137.70 (the upper line of the Bollinger Bands indicator on the D1 timeframe).   Read more: https://www.instaforex.eu/forex_analysis/314731
Market Trends and Currency Positioning: USD Net Short Position, Euro and Pound Analysis - 22.08.2023

USD/JPY Technical Analysis and Trading Tips for June 29, 2022

InstaForex Analysis InstaForex Analysis 29.06.2022 14:57
Relevance up to 12:00 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.   In the middle of this month, USD/JPY broke a multi-year high and 135.19, reached in January 2002, and today the pair continues to develop an upward momentum. In our previous reviews, we assumed that the divergence in the monetary policy rates of the Fed and the Bank of Japan is likely to increase, creating prerequisites for further growth of USD/JPY. In this case, the pair will head towards multi-year highs near 135.00, reached in January 2002. Our forecast was fully justified, and the set targets (Buy Stop 125.50. Stop Loss 124.40. Take-Profit 125.65, 126.00, 127.00, 128.00, 134.00, 135.00) were achieved. Moreover, the price rewrote the multi-year high of 135.19 and hit a new all-time high of 136.70 last week.     USD/JPY is currently trading near 136.50, with potential for further gains. There is a strong upward momentum, fueled by increasing divergence in the direction of the monetary policies of the Fed and the Bank of Japan. The breakdown of the local high at 136.70 will be a signal to increase long positions. In an alternative scenario, the signal for short-term sales will be a breakdown of the support level of 135.19 (local support level and 200 EMA on the 1-hour chart).     In this case, the downward correction may continue to the support level of 132.37 (200 EMA on the 4-hour chart) and even lower to the support level of 131.00 (local highs, 50 EMA and the lower line of the rising channel on the daily chart), where pending buy orders can be placed. A deeper decline is unlikely. Volatility in the market and in USD/JPY quotes may sharply increase again today at 12:30 and 13:00 (GMT).     In the main scenario, we expect continued growth. Support levels: 136.00, 135.19, 132.37, 131.00, 126.55, 124.20, 121.65 Resistance levels: 136.70, 137.00 Trading Tips Buy Stop 136.55. Stop Loss 135.70. Take-Profit 136.70, 137.00, 138.00, 139.00, 140.00 Sell Stop 135.70. Stop Loss 136.55. Take-Profit 135.19, 132.37, 131.00   Read more: https://www.instaforex.eu/forex_analysis/314851
Fed's Bowman Highlights Potential for More Rate Hikes; German Industrial Production Dips to 6-Month Low

FX: What's Possibly Ahead Of USD/JPY And AUDUSD?

InstaForex Analysis InstaForex Analysis 09.08.2022 15:23
Relevance up to 08:00 2022-08-11 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Positive sentiment ruled over markets on Monday, as a result of which stock indices in Asia and Europe rose. Dynamics in the US, meanwhile, was quite ambiguous. After the release of strong data on US employment and average wages last Friday, markets began to doubt if the Fed will soften its stance on monetary policy. This led to a sharp increase in dollar demand, as well as mixed dynamics in markets, primarily in the US. The better-than-expected figures allow the Fed to continue raising rates without the fear of a weakening labor market. This, of course, is negative for stock markets. Nevertheless, investors are now focused on the upcoming US inflation report tomorrow, which could indicate whether the Fed will raise rates further or not. If the data turns out to be in line with the forecast and shows a corrective decline in annual terms from 9.1% to 8.7%, and a slowdown from 1.3% to 0.2% on a monthly basis, it is likely that the central bank will remain on its previous position, that is, a pause in rate hikes in August then a sharp decline to 0.25% in the next months. This will be taken as good news by markets, possibly leading to a new, but limited rally. If the value of inflation falls even more, expect a more vigorous increase in positive sentiment. But if inflation continues to increase, sell-offs will escalate, while dollar will rise even more. This is because the Fed will most likely continue its aggressive rate hike. In other words, a slowdown in inflationary pressure, or even a slight decrease, will put pressure on dollar and increase risk appetite. Further pressure, meanwhile, will raise dollar and push down stocks and other assets. Forecasts for today:     AUD/USD The pair is trading above the support level of 0.6965. Further selling pressure could lead to a local fall to 0.6870. USD/JPY The pair is below 135.15. But increased buying pressure will push the quote to 136.25. Read more: https://www.instaforex.eu/forex_analysis/318414
Forex: USD/JPY Is Expected To Reach 145 In The End Of The Year. Why Is That?

USD To JPY: This Forex Forecast May Catch You By Surprise! What Can We Expect Form (US Dollar To Japanese Yen)?

InstaForex Analysis InstaForex Analysis 16.08.2022 08:36
Relevance up to 04:00 2022-08-17 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Stock market - S&P 500, China A50, Nikkei 225 Stock markets are not yet paying attention to a new wave of fears about the global recession, which was caused by yesterday's data on the Chinese economy. In July, Chinese industrial production reduced the rise from 3.9% y/y to 3.8% y/y, retail sales decreased from 3.1% y/y to 2.7% y/y, the base rate of the NBC was reduced from 3 .70% to 2.75%. Despite the friendly fall in European currencies, the S&P 500 stock index rose by 0.40%, today China A50 adds 0.37% in the Asian session, the Japanese Nikkei 225 adds a symbolic 0.03%.   Possible scenario - USD/JPY As a result, amid the growth of the dollar and stock markets, we are waiting for the USD/JPY pair to move up to the nearest target of 134.26 - to the embedded line of the price channel of the monthly timeframe. Consolidating above the level may extend the growth to the target of 136.02 - to the upper line of the price channel. Federal Reserve We believe that at some point investors will begin to withdraw from risk as the Federal Reserve meeting on September 21 approaches, but for now, time makes it possible to follow these sentiments amid a rising market.   The price is above the MACD indicator line on the 4-hour chart, but Marlin is in negative territory both here and on the daily chart. Therefore, we also have in mind an alternative scenario - consolidating under the MACD line, below the level of 132.67, then leaving the area under the support of 132.18, and further development of the downward movement with the target of 129.40.   Read more: https://www.instaforex.eu/forex_analysis/318971
Saxo Bank Podcast: The Upcoming Bank Of Japan Meeting, A Look At Crude Oil, Copper And More

Japanese Yen (JPY) Rise. Energy Prices Are Finally Falling!?

John Hardy John Hardy 16.08.2022 10:05
Summary:  Weak data out of China overnight, together with a surprise rate cut from the PBOC and collapsing energy prices later on Monday saw the Japanese yen surging higher across the board. Indeed, the two key factors behind its descent to multi-decade lows earlier this year, rising yields and surging energy prices, have eased considerably since mid-June with only modest reaction from the yen thus far. Is that about to change? FX Trading focus: JPY finding sudden support on new disinflation narrative Weaker than expected Chinese data overnight brought a surprise rate cut from the Chinese central bank and seems to have sparked a broadening sell-off in commodities, which was boosted later by a crude oil drop of some five dollars per barrel on the news that Iran will decide by midnight tonight on whether to accept a new draft on the nuclear deal forward by the Euro zone. In response, the Chinese yuan has weakened toward the highs for the cycle in USDCNH, trading 6.78+ as of this writing and  (there was a spike high to 6.381 back in May but the exchange rate has been capped by 6.80 since then), but the Japanese yen is stealing the volatility and strength crown, surging sharply across the board and following up on the move lower inspired by the soft US CPI data point. US long yields easing considerably lower after an odd spike last Thursday are a further wind at the JPY’s back here. In the bigger picture, it has been rather remarkable that the firm retreat in global long-date yields since the mid-June peak and the oil price backing down a full 25% and more from the cycle highs didn’t do more to support the yen from the yield-spread angle (Bank of Japan’s YCC policy less toxic as yields fall) and from the current account angle for Japan. Interestingly, while the JPY has surged and taken USDJPY down several notches, the US dollar is rather firm elsewhere, with the focus more on selling pro-cyclical and commodity currencies on the possible implication that China may be content to export deflation by weakening its currency now that commodity prices have come down rather than on selling the US dollar due to any marking down of Fed expectations. Still, while the USD may remain a safe haven should JPY volatility be set to run amok across markets, the focus is far more on the latter as long as USDJPY is falling Chart: EURJPY As the JPY surges here, EURJPY is falling sharply again, largely tracking the trajectory of longer European sovereign yields, which never really rose much from their recent lows from a couple of weeks back, making it tough to understand the solid rally back above 138.00 of late. After peaking above 1.90% briefly in June, the German 10-year Bund, for example, is trading about 100 basis points lower and is not far from the cycle low daily close at 77 basis points. The EURJPY chart features a rather significant pivot area at 133.50, a prior major high back in late 2021 and the recent low and 200-day moving average back at the beginning of the month. After a brief JPY volatility scare in late July and into early August that faded, are we set for a second and bigger round here that takes USDJPY down through 130.00 and EURJPY likewise? A more significant rally in long US treasuries might be required to bring about a real JPY rampage. Source: Saxo Group The focus on weak Chinese data and key commodity prices like copper suddenly losing altitude after their recent rally has the Aussie shifting to the defensive just after it was showing strength late last week in sympathy with strong risk sentiment and those higher commodity prices. Is the AUDUSD break above 0.7000-25 set for a high octane reversal here? AUDJPY is worth a look as well after it managed to surge all the way back toward the top of the range before. The idea that a weak Chine might export deflation from here might be unsettling for Aussie bulls. The US macro data focus for the week is on today’s NAHB homebuilder’s survey, which plunged to a low since 2015 in June (not including the chaotic early 2020 pandemic breakout months), the July Housing Starts and Building Permits and then the July Retail Sales and FOMC minutes on Wednesday. With a massive relief in gasoline prices from the July spike high, it will be interesting to see whether the August US data picks up again on the services side. The preliminary August University of Michigan sentiment survey release on Friday showed expectations rising sharply by over 7 points from the lowest since-1980 lows of June, while the Present Situation measure dropped a few points back toward the cycle (and record) lows from May. Table: FX Board of G10 and CNH trend evolution and strength. The JPY is the real story today, but as our trending measures employ some averaging/smoothing, the move will need to stick what it has achieved today to show more. Watch out for a big shift in the commodity currencies in coming days as well if today’s move is the start of something. Elsewhere, the JPY comeback is merely taking CHF from strength to strength, although even the might franc has dropped against the JPY today. Source: Bloomberg and Saxo Group Table: FX Board Trend Scoreboard for individual pairs. Big momentum shift afoot today and watching whether this holds and the JPY pairs and pairs like AUDUSD and USDCAD to see if we are witnessing a major momentum shift in themes here. Also note NOK pairs like USDNOK and EURNOK here. Source: Bloomberg and Saxo Group Upcoming Economic Calendar Highlights (all times GMT) 1400 – US Aug. NAHB Housing Market Index 0130 – Australia RBA Meeting Minutes Source: FX Update: JPY jumps on deflating energy prices, fresh retreat in yields.
USA: People Are Not Interested In Buying New Houses! Equities Are Still Trading High As The Hopes For Iran Nuclear Deal Are Still Alive

USA: People Are Not Interested In Buying New Houses! Equities Are Still Trading High As The Hopes For Iran Nuclear Deal Are Still Alive

Saxo Strategy Team Saxo Strategy Team 16.08.2022 14:00
Summary:  Equities traded higher still yesterday as treasury yields fell further back into the recent range and on hopes that an Iran nuclear deal will cement yesterday’s steep drop in oil prices. The latest data out of the US was certainly nothing to celebrate as the July US Homebuilder survey showed a further sharp drop in new housing interest and a collapse in the first regional US manufacturing survey for August, the New York Fed’s Empire Manufacturing.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) S&P 500 futures extended their gains yesterday getting closer to the 200-day moving average sitting around the 4,322 level. The US 10-year yield seems well anchored below 3% and financial conditions indicate that S&P 500 futures could in theory trade around 4,350. The news flow is light but earnings from Walmart later today could impact US equities should the largest US retailer lower their outlook for the US consumer. Hong Kong’s Hang Seng (HSI.I) and China’s CSI300 (000300.I) Hong Kong and mainland Chinese equities were mixed. CSI300 was flat, with electric equipment, wind power, solar and auto names gained. Hang Seng Index declined 0.5%. Energy stocks fell on lower oil price. Technology names were weak overall, Hang Seng TECH Index (HSTECH.I) declined 0.9%. Sunny Optical (02382:xhkg) reported worse than expected 1H22 results, revenues -14.4% YoY, net profits -49.5%, citing weakening component demand from the smartphone industry globally. The company’s gross margin plunged to 20.8% from 24.9%. Li Auto’s (02015:xhkg/LI:xnas) Q2 results were in line with expectations but Q3 guidance disappointed. The launch L9 seems cannibalizing Li ONE sales. USD: strength despite weak US data and falling treasury yields and strong risk sentiment Yesterday, the JPY tried to make hay on China cutting rates and as global yields eased back lower, with crude oil marked several dollars lower on hopes for an Iran nuclear deal. But the move didn’t stick well in USDJPY, which shrugged off these developments as the USD firmed further across the board, despite treasury yields easing lower, weak data and still strong risk sentiment/easy financial conditions. A strong US dollar is in and of itself is a tightening of financial conditions, however, and yesterday’s action has cemented a bullish reversal in some pairs, especially EURUSD and GBPUSD, where the next important levels pointing to a test of the cycle lows are 1.0100 and 1.2000, respectively. Elsewhere, USDJPY remains in limbo (strong surge above 135.00 needed to suggest upside threat), USDCAD has posted a bullish reversal but needs 1.3000 for confirmation, and AUDUSD is teetering, but needs a close back below 0.7000 to suggest a resurgent US dollar and perhaps widening concerns that a Chinese recession will temper interest in the Aussie. Crude oil Crude oil (CLU2 & LCOV2) trades lower following Monday’s sharp drop that was driven by a combination softer economic data from China and the US, the world’s top consumers of oil, and after Iran signaled a nuclear deal could be reached soon, raising the prospect of more Iranian crude reaching the market. The latest developments potentially reducing demand while adding supply forced recently established longs to bail and short sellers are once again in control. Brent needs to hold support at $93 in order to avoid further weakness towards $90. Focus on Iran news. Copper Copper (COPPERUSSEP22) led the metals pack lower, without breaking any key technical levels to the downside, after China’s domestic activity weakened in July. Meanwhile, supply side issues in Europe also cannot be ignored with surging power prices putting economic pressure on smelters, and many of them running at a loss. HG copper jumped 19% during the past month and yesterday’s setback did not challenge any key support level with the first being around $3.50/lb. BHP, the world’s top miner meanwhile hit record profits while saying that China is likely to offer a “tail wind” to global growth (see below). EU power prices hit record high on continued surge in gas prices ... threatening a deeper plunge into recession. The latest surge being driven by low water levels on Europe’s rivers obstructing the normal passage for diesel, coal, and other fuel products, thereby forcing utilities to use more gas European Dutch TTF benchmark gas futures (TTFMU2) has opened 5% higher at €231/MWh, around 15 times higher than the long-term average, suggesting more pain ahead for European utility companies. Next-year electricity rates in Germany (DEBYF3) closed 3.7% higher to 477.50 euros ($487) a megawatt-hour on the European Energy Exchange AG. That is almost six times as much as this time last year, with the price doubling in the past two months alone. UK power prices were also seen touching record highs. US Treasuries (IEF, TLT) see long-end yields surging. Yields dipped back lower on weak US economic data, including a very weak Empire Manufacturing Survey (more below) and another sharp plunge in the NAHB survey of US home builders, suggesting a rapid slowdown in the housing market. The survey has historically proven a leading indicator on prices as well. The 10-year benchmark dipped back further into the range after threatening to break up higher last week. The choppy range extends down to 2.50% before a drop in yields becomes a more notable development, but tomorrow’s US Retail Sales and FOMC minutes offer the next test of sentiment. What is going on? Weak Empire State manufacturing survey and NAHB Index Although a niche and volatile measure, the United States NY Empire State Manufacturing Index, compiled by the New York Federal Reserve, fell to -31.3 from 11.1 in July, its lowest level since May 2020 and its sharpest monthly drop since the early days of the pandemic. New orders and shipments plunged, and unfilled orders also declined, albeit less sharply. Other key areas of concern were the rise in inventories and a decline in average hours worked. This further weighed on the sentiment after weak China data had already cast concerns of a global growth slowdown earlier. Meanwhile, the US NAHB housing market index also saw its eighth consecutive monthly decline as it slid 6 points to 49 in August. July housing starts and building permits are scheduled to be reported later today, and these will likely continue to signal a cooling demand amid the rising mortgage rates as well as overbuilding. China's CATL plans to build its second battery factory in Europe CATL unveiled plans to build a renewable energy-powered factory for car battery cells and modules in Hungary. It will invest EUR 7.34 billion (USD 7.5bn) on the 100-GWh facility, which will be its second one in Europe. To power the facility CATL will use electricity from renewable energy source, such as solar power. At present, CATL is in the process of commissioning its German battery production plant, which is expected to roll out its first cells and modules by the end of 2022. Disney (DIS) shares rise on activist investor interest Daniel Loeb of Third Point announced a significant new stake in Disney yesterday, helping to send the shares some 2.2% higher in yesterday’s session. The activist investor recommended that the company spin off its ESPN business to reduce debt and take full ownership of the Hulu streaming service, among other moves. Elliott exits SoftBank Group The US activist fund sold its stake in SoftBank earlier this year in a sign that large investors are scaling back on their investments in technology growth companies with long time to break-even. In a recent comment, SoftBank’s founder Masayoshi Son used more cautious words regarding the investment company’s future investments in growth companies. BHP reports its highest ever profit, bolstered by coal BHP posted a record profit of $21.3bn supported by considerable gains in coal, nickel and copper prices during the fiscal year ending 30 June 2022. Profits jumped 26% compared to last year’s result. The biggest driver was a 271% jump in the thermal coal price, and a 43% spike in the nickel price. The world’s biggest miner sees commodity demand improving in 2023, while it also sees China emerging as a source of stable commodity demand in the year ahead. BHP sees supply covering demand in the near-term for copper and nickel. According to the company iron ore will likely remain in surplus through 2023. In an interview Chief Executive Officer Mike Henry said: Long-term outlook for copper, nickel and potash is really strong because of “unstoppable global trends: decarbonization, electrification, population growth, increasing standards of living,” What are we watching next? Australia Q2 Wage Index tonight to determine future RBA rate hike size? The RBA Minutes out overnight showed a central bank that is trying to navigate a “narrow path” for keeping the Australian economy on an “even keel”. The RBA has often singled out wages as an important risk for whether inflation risks becoming more embedded and on that note, tonight sees the release of the Q2 Wage Index, expected to come in at 2.7% year-on-year after 2.4% in Q1. A softer data point may have the market pulling back expectations for another 50 basis point rate hike at the next RBA meeting after the three consecutive moves of that size. The market is about 50-50 on the size of the RBA hike in September, pricing a 35 bps move. RBNZ set to decelerate its guidance after another 50 basis point move tonight? The Reserve Bank of New Zealand is expected to hike its official cash rate another 50 basis points tonight, taking the policy rate to 3.00%. With business and consumer sentiment surveys in the dumps in New Zealand and oil prices retreating sharply the RBNZ, one of the earliest among developed economies to tighten monetary policy starting late last year, may be set for more cautious forward guidance and a wait and see attitude, although wages did rise in Q2 at their second fastest pace (+2.3% QoQ) in decades. The market is uncertain on the future course of RBNZ policy, pricing 44 bps for the October meeting after tonight’s 50 bps hike and another 36 bps for the November meeting. US retailer earnings eyed After disappointing results last quarter, focus is on Walmart and Home Depot earnings later today. These will put the focus entirely on the US consumer after the jobs data this month highlighted a still-tight labor market while the inflation picture saw price pressures may have peaked. It would also be interesting to look at the inventory situation at these retailers, and any updated reports on the status of the global supply chains.   Earnings to watch Today’s US earnings focus is Walmart and Home Depot with analysts expecting Walmart to report 7% revenue growth y/y and 8% decline y/y in EPS as the US retailer is facing difficulties passing on rising input costs. Home Depot is expected to report 6% growth y/y in revenue and 10% growth y/y in EPS as the US housing market is still robust driving demand for home improvement products. Sea Ltd, the fast-growing e-commerce and gaming company, is expected to report revenue growth of 30% y/y in Q2 but worsening EBITDA margin at -16.2%. The previous winning company is facing headwinds in its gaming division and cash flow from operations have gone from positive $318mn in Q1 2021 to negative $724mn in Q1 2022. Today: China Telecom, Walmart, Agilent Technologies, Home Depot, Sea Ltd Wednesday: Tencent, Hong Kong Exchanges & Clearing, Analog Devices, Cisco Systems, Synopsys, Lowe’s, CSL, Target, TJX, Coloplast, Carlsberg, Wolfspeed Thursday: Applied Materials, Estee Lauder, NetEase, Adyen, Nibe Industrier, Geberit Friday: China Merchants Bank, CNOOC, Shenzhen Mindray, Xiaomi, Deere Economic calendar highlights for today (times GMT) 0900 – Germany Aug. ZEW Survey 0900 – Eurozone Jun. Trade Balance 1200 – Poland Jul. Core CPI 1215 – Canada Jul. Housing Starts 1230 – US Jul. Housing Starts and Building Permits 1230 – Canada Jul. CPI 2030 – API Weekly Report on US Oil Inventories 2350 – Japan Jul. Trade Balance 0130 – Australia Q2 Wage Index 0200 – New Zealand RBNZ Official Cash Rate announcement 0300 – New Zealand RBNZ Governor Orr Press Conference  Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher Source: Financial Markets Today: Quick Take – August 16, 2022
The Carbon Footprint of Different Steel Production Technologies

Forex: So Could Japanese Yen (JPY) Finally Start To Grow?

InstaForex Analysis InstaForex Analysis 17.08.2022 14:52
Relevance up to 10:00 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results.   Since the beginning of the year, the dollar has gained more than 10% against the yen. However, now the alignment of forces is beginning to quietly but surely change in favor of the JPY. How and why can the yen take the lead? The dollar is still on the horse The main growth trigger for the USD/JPY pair this year was the monetary divergence. While the US Federal Reserve is actively fighting inflation by raising interest rates, its Japanese counterpart continues to go the dovish route.The bearish yen peaked in mid-July. Back then, on expectations of a more hawkish Fed policy, USD/JPY jumped to a new 24-year high of 139. Many experts predicted that a further increase in the difference in interest rates between the US and Japan would allow the asset to rise above the level of 140. But this did not happen. On the contrary, since reaching its July low, the Japanese yen has managed to strengthen against the dollar by 3%. It was strongly supported by the latest US inflation report. Recall that in July, inflationary pressure in the US eased significantly. This provoked speculation about a possible slowdown in the rate hike by the Fed. However, most Fed officials are still in favor of continuing the aggressive course. This keeps US Treasury yields high and fuels the dollar. Yesterday, the yield on 10-year US bonds rose to 2.82%, while the greenback index updated a 3-week high, reaching 106.94. The figures rose ahead of today's release of the minutes of the meeting of the Federal Open Market Committee. Investors expect to see hints of a 75 bps rate hike in the FOMC minutes in September. Against this backdrop, the USD/JPY pair showed a spectacular rise on Tuesday, soaring to 134. Compared to the low of 131.73 reached on August 11, the asset rose by 1.7%.     Obvious-incredible: the yen will rise Despite the current weakness of the Japanese currency against the dollar, some analysts believe that the JPY will begin to gradually gain strength in the near future. The fact that the yen now has a good growth potential is evidenced by its impressive dynamics in other currency pairs. Thus, against the euro, the exchange rate of the yen jumped by almost 6% from its June low - a mark of 144. And against the British pound, the yen has grown since the beginning of August by about 4%. "The yen's selling momentum is clearly waning from its peak," said currency strategist Yukio Ishizuki. – Of course, we are not yet seeing a massive move to buying JPY, but we see that it is becoming increasingly difficult for traders to stick to the strategy of short positions in the yen. The latest data from the Commodity Futures Trading Commission showed that leveraged investors cut their net bearish bets on the Japanese currency to the lowest level since March last year. All this indicates that the worst for the yen seems to be over. Just ahead is an ascent in relation to many currencies, including the dollar. Recall that on June 21, the trade-weighted yen index bottomed out. Since then, the JPY has been able to rise against 8 of its peers from the group of 10. "This is a sign that the recovery in the yen may be more than just a reaction to the recent narrowing of the gap between US and Japanese bond yields," writes Bloomberg. According to analysts of the release, the main catalyst for the yen's growth now is the growing fears about the slowdown in global economic growth. The risk of a global recession amid a deep energy crisis in Europe increases the appeal of safe assets, which traditionally include the Japanese currency. Bloomberg analysts believe that the level of bull confidence in the yen could be even more stable if the JPY managed to strengthen more against the Australian dollar. Since June 21, the yen has risen only 1% against the aussie. Meanwhile, a further decline in commodity prices due to fears of a slowdown in the global economy could undermine the position of the Australian currency. In this case, the yen index is likely to begin a convincing increase, as a result of which a bullet will be put in the USD/JPY rally.   Read more: https://www.instaforex.eu/forex_analysis/319152
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Forex: Watch Out USD/JPY! Japanese Inflation Has Just Set A New Record!

Kenny Fisher Kenny Fisher 19.08.2022 12:45
The struggling Japanese yen is in negative territory for a fourth straight day. In the European session, USD/JPY is trading at 136.71, up 0.61%. Japanese Core CPI hits 14-year high Japan’s core inflation continued to accelerate, with a gain of 2.4% YoY in July. This matched the forecast and was higher than the 2.2% reading in June. The reading is significant as it is the highest inflation level since 2008 and is the fourth straight month where inflation has exceeded the Bank of Japan’s target of 2%. For years, Japan grappled with deflation, which resulted in fiscal and monetary policy with an accommodative stance. The world has changed dramatically since the Russian invasion of Ukraine, however, which has set off a massive rise in inflation. Japan’s inflation rate is nowhere near those in the US or the UK, but nevertheless, higher inflation has forced the BoJ to explain why it is not tightening policy. Governor Kuroda has repeatedly stated that the BoJ’s number one priority is to stimulate weak growth, and he has vigorously defended a cap on JGB yields. Kuroda has argued that inflation is not being driven by strong domestic demand, but rather by higher import prices due to the surge in wheat and oil prices. Until wage growth strengthens, which would point to broad-based inflation, we can expect “business as usual’ from the BoJ. The price for the BoJ’s ultra-accommodative stance has been the sharp depreciation of the yen, which hit 140 in July, its lowest level since 1998. If inflation’s upward trend continues and CPI hits 3%, the BoJ may have to reconsider whether to make changes to policy. USD/JPY Technical There is resistance at 1.3744 and 139.30 135.46 has switched to support, followed by 1.3350   This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Yen slide continues as inflation rises - MarketPulseMarketPulse
USD/JPY Eyes Psychological Level of 150.00 Amidst BoJ's Monetary Policy and Fed's Rate Hike Expectations

The Bank Of England (BoE) Chasing The Inflation. Forex: GBPUSD, CNHJPY, EURUSD And Others

John Hardy John Hardy 19.08.2022 13:41
Summary:  The USD is breaking higher still, with important levels falling versus the Euro and yen yesterday. But the pain in sterling is most intense as presaged by the lack of a response to surging UK rates. Can the Bank of England do anything but continue to chase inflation from behind, caught between the Scylla of inflation and the Charybdis of a vicious recession? Also, USDCNH lurks at the top of the range ahead of another PBOC rate announcement on Monday. FX Trading focus: USD wrecking ball swinging again. UK faced with classic ugly choice between taking the pain via inflation or a severe recession The US dollar strength has picked up further after yesterday saw the breakdown in EURUSD below 1.0100 and a shot through 135.50 in USDJPY as longer US yields pushed to local highs. GBPUSD has been a bigger move on sterling weakness as discussed below.  A bit of resilient US data (especially the lower jobless claims than expected and a sharp revision lower of the prior week’s data taking the momentum out of the rising trend) has helped support the USD higher as longer US yields rose a bit further, taking the 10-year US treasury yield benchmark to new local highs, although we really need to see 3.00% achieved there after a few recent teases higher with no follow through higher. Looking forward to next week, the market will have to mull whether it has been too aggressive in pricing the Fed to pivot policy next year on disinflation and an easy-landing for the economy. The steady drumbeat of Fed pushback against the market’s complacency, together with a few of the recent data points (ISM Services, nonfarm payrolls, yesterday’s claims, etc.) has seen some of the conviction easing. But the key test will come next Friday, when Fed Chair Powell is set to speak on the same day we get the July PCE inflation data. Keep USDCNH on the radar through the end of today on the risk of an upside break above the range and Monday as the PBOC is set for a rate announcement (consensus expectations or another 10 bps of easing).   Chart: GBPUSD Lots at stake for sterling as discussed below, as it is a bit scary to see a currency weaken sharply despite a massive ratcheting higher in rate expectations from the central bank. The fall of 1.2000 has set in motion a focus on the 1.1760 cycle low, with an aggravated USD rise here and tightening of global financial conditions possibly quickly bringing the spike low toward 1.1500 from the early 2020 pandemic outbreak panic into focus. It is worth noting that the lowest monthly closing level for GBPUSD since the mid-1980’s is 1.2156. Without something dramatic to push back against USD strength next week from Jackson Hole, it is hard to see how this month may set the new low water mark for monthly closes. Source: Saxo Group GBPUSD slipped below 1.1900 this morning after breaking below the psychologically important 1.2000 level yesterday. As noted in the prior update, it’s remarkable to see the marked weakness in sterling despite the marking taking UK short rates sharply higher – with 2-year UK swaps over 100 basis points higher from the lows early this month. The Bank of England has expressed a determination to get ahead of the inflation spike and the market has priced in a bit more than a 50-basis-points-per-meeting pace for the three remaining BoE meetings of 2022. But is that sufficient given the UK’s structural short-comings and external deficits? Currency weakness risks adding further to spike in inflation this year. The BoE can take a couple of approaches in response: continue with the 50 bps hikes while bemoaning the backdrop and trotting out the expectation that eventually, economic weakness and easing commodity prices will feed through to drop inflation back into the range. Or, the BoE can actually get serious and super-size hikes even beyond the acceleration the market has priced, at the risk of bringing forward and increasing the severity of the coming recession. Until this week, the BoE’s anticipated tightening trajectory had prevented an aggravated weakness in sterling in broader terms, but the currency’s weakness despite a massive mark-up of BoE expectations has ratcheted the pressure on sterling and the BoE’s response to an entirely new level. Turkey shocked with a fresh rate cut yesterday of 100 basis points to take the policy rate to 13.00%. This with year-on-year inflation in Turkey at 79.6% and PPI at 144.6%, and housing measured at 160.6%. The move took USDTRY above 18.00, though it was a modest move relative to the size of the surprise. Turkish central bank chief Kavcioglu said that the bank would also look to “further strengthen macroprudential policy” by addressing the yawning difference between the policy rate and the rate commercial banks are charging for loans (more than double the official policy rate), as the push is to continue a credit-stimulated approach, inflation-be-darned.   Table: FX Board of G10 and CNH trend evolution and strength Note: a new color scheme for the FX Board! Besides changing the green for positive readings to a more pleasant blue, I have altered the settings such that trend readings don’t receive a more intense red or blue coloring until they have reached more significant levels – starting at an absolute value of 4 or higher. So far, most of the drama in sterling is the lack of a response to shifts in the UK yield curve, the broad negative momentum has only shifted a bit here, but watching for the risk of more. Source: Bloomberg and Saxo Group Table: FX Board Trend Scoreboard for individual pairs AUDNZD is crossing back higher, AUDCAD back lower, so NZDCAD….yep. Note the CNHJPY – if CNH is to make more waves, need to see more CNH weakness in an isolated sense, not just v. a strong USD. And speaking of a strong USD, the last holdouts in reversing, USDNOK and USDCHF, are on the cusp of a reversal. Source: Bloomberg and Saxo Group Upcoming Economic Calendar Highlights (all times GMT) 1230 – Canada Jun. Retail Sales 1300 – US Fed’s Barkin (Non-voter) to speak   Source: FX Update: USD surging again, GBP spinning into abyss
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Mexican Gold - Peso Is Climbing High. Russia Is Building Nuclear Plant In Turkey!?

Marc Chandler Marc Chandler 19.08.2022 14:26
Overview:  The dollar is on fire. It is rising against all the major currencies and cutting through key technical levels like a hot knife in butter. The Canadian dollar is the strongest of the majors this week, which often outperforms on the crosses in a strong US dollar environment. It is off 1.5% this week. The New Zealand dollar, where the RBNZ hiked rates this week by 50 bp, is off the most with a 3.5% drop. Emerging market currencies are mostly lower on the day and week as well. The JP Morgan Emerging Market Currency Index is off for the fifth consecutive session, and ahead of the Latam open, it is off 2.1% this week. Asia Pacific equities were mostly lower, and Europe’s is off around 0.4%. It was flat for the week coming into today. US futures are lower, and the S&P and NASDAQ look poised to snap its four-week advance. Gold, which began the week near $1800 is testing support near $1750 now. Next support is seen around $1744.50. October WTI is consolidating in the upper end of yesterday’s range, which briefly poked above $91. Initial support is pegged near $88. US natgas is softer for the third successive session, but near $9.04 is up about 3.2% for the week. Europe’s benchmark is up 1.7% and brings this week’s gain to almost 20%. Demand concerns weigh on iron ore. It was off marginally today, its fifth loss in six sessions. It tumbled 8.8% this week after a 1.15% gain last week. Copper is up fractionally after rising 1.3% yesterday. September wheat is trying to stabilize. It fell more than 4% yesterday, its fifth loss in a row. It is off around 8.5% this week. Asia Pacific Japan's July CPI continued to rise  Th headline now stands at 2.6%, up from 2.4% in June, up from 0.8% at the start of the year and -0.3% a year ago. The core measure that excludes fresh food accelerated from 2.2% to 2.4%. It is the fourth consecutive month above the 2% target. Excluding both fresh food and energy, Japan's inflation is less than half the headline rate at 1.2%. It was at -0.7% at the end of last year and did not turn positive until April. The BOJ's next meeting is September 22, and despite the uptick in inflation, Governor Kuroda is unlikely to be impressed. Without wage growth, he argues, inflation will prove transitory. With global bond yields rising again, the 10-year, the market may be gearing up to re-challenge the BOJ's 0.25% cap. The yield is finishing the week near 0.20%, its highest since late July. Separately, we note that after divesting foreign bonds in recent months, Japanese investors have returned to the buy side. They have bought foreign bonds for the past four weeks, according to Ministry of Finance data. Last week's JPY1.15 trillion purchases (~$8.5 bln) were the most since last September.  China surprised the markets to begin the week with a 10 bp reduction in the benchmark 1-year medium-term lending facility rate  It now stands at 2.75%. It was the first cut since January, which itself was the first reduction since April 2020. Before markets open Monday, China is expected to announce a 10 bp decline in the 1- and 5-year loan prime rates. That would bring them to 3.60% and 4.35%, respectively. These rates are seen closer to market rates, but the large banks that contribute the quotes are state-owned. There is some speculation that a larger cut in the 5-year rate. The one-year rate was cut in January, but the 5-year rate was cut by 15 bp in May. The dollar is rising against the yen for the fourth consecutive session  It has now surpassed the JPY137.00 area that marks the (61.8%) retracement of the decline from the 24-year high set-in mid-July near JPY139.40. There may be some resistance in the JPY137.00-25 area, but a retest on the previous high looks likely in the period ahead. The Australian dollar is off for the fifth consecutive session and this week's loss of 3% offset last week's gain of as similar magnitude and, if sustained, would be the largest weekly decline since September 2020. The Aussie began the week near $0.7125 and recorded a low today slightly below $0.6890. The $0.6855-70 area is seen as the next that may offer technical support. The PBOC set the dollar's reference rate at CNY6.8065 (median in Bloomberg's survey was CNY6.9856). The fix was the lowest for the yuan (strongest for the dollar) since September 2020. Yesterday's high was almost CNY6.7960 and today's low was a little above CNY6.8030. To put the price action in perspective, note that the dollar is approaching the (61.8%) retracement of the yuan's rise from mid-2020 (~CNY7.1780) to this year's low set in March (~CNY6.3065). The retracement is found around CNY6.8250. Europe UK retail sales surprised to the upside but are offering sterling little support  Retail sales including gasoline rose by 0.3% in July. It is the second gain of the year and the most since last October. Excluding auto fuel, retail sales rose by 0.4%, following a 0.2% gain in June. It is the first back-to-back gain since March and April 2021. Sales online surged 4.8% as discounts and promotions drew demand, and internet retailers accounted for 26.3% of all retail sales. Separately, consumer confidence, measured by GfK, slipped lower (-44 from -41), a new record low. Sterling is lower for the third consecutive session and six of the past seven sessions. The swaps market continues to price in a 50 bp rate hike next month and about a 1-in-5 chance of a 75 bp move. Nearly every press report discussing next month's Italian elections cited the fascist roots of the Brothers of Italy, which looks likely to lead the next government  Meloni, who heads up the Brothers of Italy and has outmaneuvered many of her rivals, and may be Italy's next prime minister, plays the roots down. She compares the Brothers of Italy to the Tory Party in the UK, the Likud in Israel, and the Republican Party in the US. The party has evolved, and the center-right alliance she leads no longer wants to leave the EU, it is pro-NATO, and condemns Russia's invasion of Ukraine. The center-right alliance may come close to having a sufficient majority in both chambers to make possible constitutional reform. High on that agenda appears to transform the presidency into a directly elected office. The Italian presidency has limited power under the current configuration, but it has been an important stabilizing factor in crisis. Ironically, the president, picked by parliament, stepped in during the European debt crisis and gave Monti the opportunity to form a technocrat government after Berlusconi was forced to resign in 2011. Fast-forward a decade, a government led by the Conte and the Five Star Movement collapsed and a different Italian president gave Draghi a chance to put together a government. It almost last a year-and-half. Its collapse set the stage for next month's election. The center-left is in disarray and its inability to forge a broad coalition greases the path for Meloni and Co. Italy's 10-year premium over German is at 2.25%, a new high for the month. Last month, it peaked near 2.40%. The two-year premium is wider for the sixth consecutive session. It is near 0.93%, more than twice what it was before the Draghi government collapsed. Some critics argue against the social sciences being science because of the difficulty in conducting experiments  Still an experiment is unfolding front of us. What happens when a central bank completely loses its independence and follows dubious economic logic?  With inflation at more than two decades highs and the currency near record lows, Turkey's central bank surprised everyone by cutting its benchmark rate 100 bp to 13% yesterday. Governor Kavcioglu hinted this was a one-off as it was preempting a possible slowdown in manufacturing. Even though President Erdogan promised in June rates would fall, some observers link the rate cut to the increase in reserves (~$15 bln) recently from Russia, who is building a nuclear plant in Turkey. The decline in oil prices may also help ease pressure on Turkey's inflation and trade deficit. The lira fell to new record-lows against the dollar. The lira is off about 7.5% this quarter and about 26.4% year-to-date. Significant technical damage has been inflicted on the euro and sterling  The euro was sold through the (61.8%) retracement objective of the runup since the mid-July two-decade low near $0.9950. That retracement area (~$1.0110) now offers resistance, and the single currency has not been above $1.01 today. We had suspected the upside correction was over, but the pace of the euro's retreat surprises. There is little from a technical perspective preventing a test on the previous lows. Yesterday, sterling took out the neckline of a potential double top we have been monitoring at $1.20. It is being sold in the European morning and has clipped the $1.1870 area. The low set-in mid-July was near $1.1760, and this is the next obvious target and roughly corresponds to the measuring objective of the double top.  America With no dissents at the Fed to last month's 75 bp hike, one might be forgiven for thinking that there are no more doves  Yet, as we argued even before Minneapolis Fed President Kashkari, once regarded as a leading dove, admitted that his dot in June was the most aggressive at 3.90% for year-end, hawk and dove are more meaningful within a context. Kashkari may be more an activist that either a hawk or dove. Daly, the San Francisco Fed President does not vote this year, suggested that a Fed funds target "a little" over 3% this year would be appropriate. She said she favored a 50 bp or a 75 bp move. The current target range is 2.25%-2.50%. and the median dot in June saw a 3.25%-3.50% year-end target. St. Louis Fed President Bullard says he favors another 75 bp hike next month. No surprise there. George, the Kansas, Fed President, dissented against the 75 bp hike in June seemingly because of the messaging around it, but it's tough to call her vote for a 50 bp hike dovish. She voted for the 75 bp move in July. She recognizes the need for additional hikes, and the issue is about the pace. George did not rule out a 75 bp hike while cautioning that policy operates on a lag. Barkin, the Richmond Fed President, also does not vote this year. He is the only scheduled Fed speaker today.  The odds of a 75 bp in September is virtually unchanged from the end of last week around a 50/50 proposition.  The October Fed funds implies a 2.945% average effective Fed funds rate. The actual effective rate has been rocksteady this month at 2.33%. So, the October contract is pricing in 61 bp, which is the 50 bp (done deal) and 11 of the next 25 bp or 44% chance of a 75 hike instead of a half-point move. Next week's Jackson Hole conference will give Fed officials, and especially Chair Powell an opportunity to push back against the premature easing of financial conditions  The better-than-expected Philadelphia Fed survey helps neutralize the dismal Empire State manufacturing survey. The median from Bloomberg's survey looked for improvement to -5 from -12.3. Instead, it was reported at 6.2. Orders jumped almost 20 points to -5.1 and the improvement in delivery times points to the continued normalization of supply chains. Disappointingly, however, the measure of six-month expectations remained negative for the third consecutive month. Still, the plans for hiring and capex improved and the news on prices were encouraging. Prices paid fell to their lowest since the end of 2020 (energy?) and prices received were the lowest since February 2021. The Fed also asked about the CPI outlook. The median sees it at 6% next year down from 6.5% in May. The projected rate over the next 10-years slipped to 3%. Canada and Mexico report June retail sales today  Lift by rising prices, Canada's retail sales have posted an average monthly gain this year of 1.5%. However, after a dramatic 2.2% increase in May, Canadian retail sales are expected (median in Bloomberg' survey) to rise by a modest 0.4%. Excluding autos, retail sales may have held up better. Economists look for a 0.9% increase after a 1.9% rise in May. Through the first five months of the year, Mexico's retail sales have risen by a little more than 0.5% a month. They have risen by a 5.2% year-over-year. Economists expected retail sales to have slowed to a crawl in June and see the year-over-year pace easing to 5.0%. The greenback rose the CAD1.2935 area that had capped it in the first half of the week. It settled near CAD1.2950 yesterday and is pushing closer to CAD 1.2980 now. Above here, immediate potential extends toward CAD1.3035. The US dollar is gaining for the third consecutive session against the Canadian dollar, the longest advancing streak in a couple of months. Support is seen in the CAD1.2940-50 area. The Mexican peso is on its backfoot, and is falling for the fourth session, which ended a six-day rally. The dollar has met out first target near MXN20.20 and is approaching the 20-day moving average (~MXN20.2375). Above there, the next technical target is MXN20.32. The broader dollar gains suggest it may rise above the 200-day moving average against the Brazilian real (~BRL5.2040) and the (38.2%) of the slide since the late July high (~BRL5.5140) that is found near BRL5.2185.    Disclaimer   Source: The Dollar is on Fire
Credit squeezing into central banks – what next?

Everyone Is Dissapointed In Euro (EUR). Japanese Officials Have To Face Discontests From Yields Rise

Marc Chandler Marc Chandler 21.08.2022 23:14
For many, this will be the last week of the summer. However, in an unusual twist of the calendar, the US August employment report will be released on September 2, the end of the following week, rather than after the US Labor Day holiday (September 5).   The main economic report of the week ahead will be the preliminary estimate of the August PMI  The policy implications are not as obvious as they may seem. For example, in July, the eurozone composite PMI slipped below the 50 boom/bust level for the first time since February 2021. It was the third consecutive decline. Bloomberg's monthly survey of economists picked up a cut in Q3 GDP forecasts to 0.1% from 0.2% and a contraction of 0.2% in Q4 (previously 0.2% growth). Over the past week, the swaps market has moved from around 80% sure of a 50 bp hike next month to a nearly 20% chance it will lift the deposit rate by 75 bp.  The UK's composite PMI fell in three of the four months through July  However, at 52.1, it remains above the boom/bust level, though it is the weakest since February 2021. The Bank of England's latest forecasts are more pessimistic than the market. It projects the economy will contract by 1.5% next year and another 0.3% in 2024. It has CPI peaking later this year at around 13% before falling to 5.5% in 2023 and 1.5% in 2024. Market expectations have turned more hawkish for the BOE too. A week ago, the swap market was pricing in a nearly 90% chance of another 50 bp hike. After the CPI jump reported in the middle of last week, the market fully priced in the 50 bp move and a nearly 30% chance of a 75 bp hike.   Japanese officials have successfully turned back market pressure that had driven the benchmark three-month implied volatility to 14% in mid-June, more than twice as high as it was at the start of the year  It slipped below 10% in recent days. The BOJ was forced to vigorously defend its 0.25% cap on the 10-year bond. It has spent the better part of the past three weeks below 0.20%. The BOJ has not had to spend a single yen on its defense since the end of June. However, with the jump in global yields (US 10-year yield rose 20 bp last week, the German Bund 33 bp, and the 10-year UK Gilt nearly 40 bp) and the weakness of the yen, the BOJ is likely to be challenged again.   The economy remains challenging  The composite PMI fell to 50.2 in July from 53.2 in June. It is the weakest reading since February. It has averaged 50.4 through July this year. The average for the first seven months last year was 49.0. The government is working on some support measures aimed at extending the efforts to cushion the blow of higher energy and food prices. Japan's Q2 GDP deflator was minus 0.4%, which was half of the median forecast in Bloomberg's survey, but it shows the tough bind of policy. Consider that the July CPI rose to 2.6%, and the core measure, which the BOJ targets, excludes fresh food, rose to 2.4% from 2.2%. The target is 2%, and it was the third month above it. Tokyo will report its August CPI figures at the end of the week.   Australia's flash PMI may be more influential as the futures market is nearly evenly split between a 25 bp hike and a 50 bp move at the September 6 central bank meeting  The minutes from the RBA's meeting earlier this month underscored its data dependency. However, this is about the pace of the move. The target rate is currently at 1.85%, and the futures market is near 3.15% for the end of the year, well beyond the 2.5% that the central bank sees as neutral. The weakness of China's economy may dent the positive terms-of-trade shock. The Melbourne Institute measure of consumer inflation expectations fell in August for the second month but at 5.9%, is still too high.  Through the statistical quirkiness of GDP-math, the US economy contracted in the first two quarters of the year  A larger trade deficit did not help, but the real problem was inventories. In fairness, more of the nominal growth resulted from higher prices than economists expected rather than underlying activity. Still, it does appear that the US economy is expanding this quarter, and the high-frequency data will help investors and economists assess the magnitude. While surveys are helpful, the upcoming real sector data include durable goods orders (and shipments, which feed into GDP models), July personal income and consumption figures, the July goods trade balance, and wholesale and retail inventories.   Consumption still drives more than 2/3 of the economy, and like retail sales, personal consumption expenditures are reported in nominal terms, which means that they are inflated by rising prices  However, the PCE deflator is expected to slow dramatically. After jumping 1% in June, the headline deflator is expected to increase by 0.1%. This will allow the year-over-year rate to slow slightly (~6.5% from 6.8%). The core deflator is forecast (median, Bloomberg's survey) to rise by 0.4%, which given the base effect, could see the smallest of declines in the year-over-year rate that stood at 4.8% in June. Given the Fed's revealed preferences when it cited the CPI rise in the decision in June to hike by 75 bp instead of 50 bp, the CPI has stolen the PCE deflator's thunder, even though the Fed targets the PCE deflator. Real consumption was flat in Q2, and Q3 is likely to have begun on firmer footing.   The softer than expected CPI, PPI, and import/export prices spurred the market into downgrading the chances of a 75 bp hike by the Fed next month  After the stronger than expected jobs growth, the Fed funds futures priced in a little better than a 75% chance of a 75 bp hike. It has been mostly hovering in the 40%-45% range most of last week but finished near 55%. It is becoming a habit for the market to read the Fed dovishly even though it is engaged in a more aggressive course than the markets anticipated. This market bias warns of the risk of a market reversal after Powell speaks on August 26.   At the end of last year, the Fed funds futures anticipated a target rate of about 0.80% at the end of this year. Now it says 3.50%. The pace of quantitative tightening is more than expected and will double starting next month. There is also the tightening provided by the dollar's appreciation. For example, at the end of 2021, the median forecast in Bloomberg's survey saw the euro finishing this year at $1.15. Now the median sees the euro at $1.04 at the end of December. And even this may prove too high.    The FOMC minutes from last month's meeting recognized two risks. The first was that the Fed would tighten too much. Monetary policy impacts with a lag, which also acknowledges that soft-landing is difficult to achieve. The market initially focused on this risk as is its wont. However, the Fed also recognized the risk of inflation becoming entrenched and characterized this risk as "significant." The Jackson Hole confab (August 25-27) will allow the Fed to help steer investors and businesses between Scylla and Charybdis.  Critics jumped all over Fed Chair Powell's claim that the Fed funds target is now in the area the officials regard as neutral. This was not a forecast by the Chair, but merely a description of the long-term target rate understood as neither stimulating nor restricting the economy. In June, all but three Fed officials saw the long-term rate between 2.25% and 2.50%. To put that in perspective, recall that in December 2019, the median view of the long-term target was 2.50%. Eleven of the 18 Fed officials put their "dot" between 2.25% and 2.50%. The FOMC minutes were clear that a restrictive stance is necessary, and the Fed clearly signaled additional rate hikes are required. The discussions at Jackson Hole may clarify what the neutral rate means.  Barring a significant downside surprise, we expect the Fed will deliver its third consecutive 75 bp increase next month. The strength and breadth of the jobs growth while price pressures remain too high and financial conditions have eased encourages the Fed to move as fast as the market allows. However, before it meets, several important high-frequency data points will be revealed, including a few employment measures, the August nonfarm payroll report, and CPI.   The market is also having second thoughts about a rate cut next year  At the end of July, the implied yield of the December 2023 Fed funds futures was 50 bp below the implied yield of the December 2022 contract. It settled last week at near an 8 bp discount. This reflects a growing belief that the Fed will hike rates in Q1 23. The March 2023 contract's implied yield has risen from less than five basis points more than the December 2022 contract to more than  20 bp above it at the end of last week.   Let's turn to the individual currency pairs, put last week's price action into the larger context, and assess the dollar's technical condition  We correctly anticipated the end of the dollar's pullback that began in mid-July, but the power for the bounce surprises. Key technical levels have been surpassed, warning that the greenback will likely retest the July highs.   Dollar Index: DXY surged by more than 2.3% last week, its biggest weekly advance since March 2020. The momentum indicators are constructive and not over-extended. However, it closed well above the upper Bollinger Band (two standard deviations above the 20-day moving average), found near 107.70. Little stands in the way of a test on the mid-July high set around 109.30. Above there, the 110-111.30 area beckons. While the 107.50 area may offer some support now, a stronger floor may be found closer to 107.00.   Euro:  The euro was turned back from the $1.0365-70 area on August 10-11 and put in a low near $1.0030 ahead of the weekend. The five-day moving average slipped below the 20-day moving average for the first time in around 3.5 weeks. The MACD is trending lower, while the Slow Stochastic did not confirm the recent high, leaving a bearish divergence in its wake. The only caution comes from the euro's push through the lower Bollinger Band (~$1.0070). Initially, parity may hold, but the risk is a retest on the mid-July $0.9950 low. A convincing break could target the $0.96-$0.97 area. As the euro has retreated, the US two-year premium over Germany has trended lower. It has fallen more than 30 bp since peaking on August 5. We find that the rate differential often peaks before the dollar.   Japanese Yen: The dollar will begin the new week with a four-day advance against the yen in tow. It has surpassed the (61.8%) retracement objective of the pullback since the mid-July high (~JPY139.40) found near JPY136.00. The momentum indicators are constructive, and the five-day moving average has crossed above the 20-day for the first time since late July. It tested the lower band of the next resistance bans seen in the JPY137.25-50 area at the end of last week. But it appears poised to re-challenge the highs. As volatility increases and yields rise, Japanese officials return to their first line of defense: verbal intervention.  British Pound: Sterling took out the neckline of a possible double top we have been monitoring that came in at $1.20. It projects toward the two-year lows set in mid-July near $1.1760, dipping below $1.18 ahead of the weekend. As one would expect, the momentum indicators are headed lower, and the five-day moving average has fallen below the 20-day moving average for the first time in four weeks. It has closed below its lower Bollinger Band (~$1.1910) in the last two sessions. A convincing break of the $1.1760 low clears the way to the March 2020 low, about 3.5-cents lower. Initial resistance is now seen around $1.1860 and, if paid, could signal scope for another 3/4 to a full-cent squeeze.  Canadian Dollar:  The Canadian dollar was no match for the greenback, which moved above CAD1.30 ahead of the weekend for the first time in a month. The momentum indicators suggest the US dollar has more scope to advance, and the next target is the CAD1.3035 area. Above there, the CAD1.3100-35 band is next. The high since November 2020 was recorded in the middle of July around CAD1.3225. After whipsawing in Q1, the five- and 20-day moving averages have caught the big moves. The shorter average crossed above the longer moving average last week for the first time since July 21. Initial support will likely be encountered near CAD1.2935.   Australian Dollar:  The Aussie was sold every day last week. It is the first time in a year, and its 3.4% drop is the largest since September 2020.   The rally from the mid-July low (~$0.6680) to the recent high (~$0.7135) looks corrective in nature. Before the weekend, it tested the rally's (61.8%) retracement objective. The momentum indicators are falling, and the Slow Stochastic did not confirm this month's high, creating a bearish divergence. A break of the $0.6850-60 area may signal follow-through selling into the $0.6790-$0.6800 band, but a retest on the July low is looking increasingly likely. Initial resistance is now seen near $0.6920.   Mexican Peso:  The peso's four-day slide ended a six-day run. The peso lost about 1.6% last week, slightly better than the 2.25% slide of the JP Morgan Emerging Market Currency Index. This month, the US dollar peaked around MXN20.8335 and proceeded to fall and forged a base near MXN19.81. It has met the (38.2%) retracement objective around MXN20.20 before the weekend. The next (50%) retracement is near MXN20.3230. The 200-day moving average is closer to MXN20.41. The dollar is probing the 20-day moving average seen a little below MXN20.24. The momentum indicators have only just turned up for the greenback. We suspect there may be potential to around MXN20.50 in the coming days.   Chinese Yuan:  The yuan was tagged with more than a 1% loss against the dollar last week, its biggest decline in three months. A combination of poor Chinese data, its small rate cut, and a resurgent US dollar spurred the exchange rate adjustment. At the end of July, China's 10-year yield was about 11 bp on top of the US. However, it switched to a discount after the US jobs data (August 5), and the discount grew every day last week, reaching 35 bp, the most since late June. After gapping higher before the weekend, the greenback reached nearly CNY6.8190, its highest level since September 2020. The next target is around CNY6.85, but given the divergence of policy, a move back toward CNY7.00, last seen in July 2020, maybe a reasonable medium-term target. The PBOC's dollar fix ahead of the weekend showed no protest of the weaker exchange rate.     Disclaimer   Source: Flash PMI, Jackson Hole, and the Price Action
The Run Higher In Japanese Yields Is Likely To Create Further Volatility In Global Markets

Forex: USD/JPY (US Dollar To Japanese Yen) - What To Expect?

InstaForex Analysis InstaForex Analysis 22.08.2022 08:05
Relevance up to 04:00 2022-08-23 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. The dollar continues to advance on the Japanese yen for the eighth consecutive session. The quote of the USD/JPY pair is already struggling with the resistance of the MACD indicator line of the daily scale, above it is the target level of 137.80, formed by the embedded line of the price channel of the monthly timeframe.     The signal line of the Marlin Oscillator is slowing down the growth and this suggests an impending correction, since all this growth in the dollar is taking place amid a decline in the stock market. The S&P 500 lost 1.29% on Friday. The price may soon turn into a correction on a new wave of flight from risk.     The Marlin Oscillator has gone sideways on the four-hour chart, the price continues to grow. Long positions in this situation are associated with increased risk. Growth may continue if the price consolidates above the resistance line at 137.80, the target will be 139.02. The depth of a possible correction is not visible at the moment, but it may be the area of 134.35 - the area of the embedded line of the price channel on a daily scale, to which the MACD line on a four-hour scale is approaching.   Read more: https://www.instaforex.eu/forex_analysis/319473
Shocking Forex Forecast! Check How EUR/USD, USD/JPY And GBP/USD May Develop In The Neatr Future!

Shocking Forex Forecast! Check How EUR/USD, USD/JPY And GBP/USD May Develop In The Neatr Future!

ING Economics ING Economics 23.08.2022 11:37
The dollar has corrected around 3% from its highs seen last month. This has prompted a few questions about whether the dollar has peaked? Many trading partners would hope that to be the case, but the reality is that the Fed is likely to stay on track with its tightening. We think the dollar is more likely to retest its highs than correct much lower. Driving this view has been consistent rhetoric from the Fed that it will not be blown off target by some softer activity or price data. In fact, it now looks like US activity is accelerating again as lower gasoline prices leave more dollars in the pockets of US consumers. The 2023 US recession narrative looks a tough one to sell near term. And rising energy prices should continue to drive a wedge between the exporters of North America and the importers of Europe, meaning a much greater conviction of a recession in Europe. The ECB’s second 50bp rate hike on 8 September may well conclude its tightening cycle. Rate spreads and the energy income shock make it a very tough environment for the euro. EUR/USD should therefore drift near parity for much of 2H22. Elsewhere in Europe, the Swiss franc continues to be guided higher by the Swiss National Bank. Sterling remains vulnerable on recession fears. Beyond some substantial fiscal stimulus, sterling’s best hope is that the Bank of England delivers on most of the aggressive tightening currently priced into markets. Surging gas prices also spell trouble for the CEE4 currencies. The Polish zloty in particular looks unlikely to hold recent gains. Emerging market currencies have enjoyed a mini-renaissance over the last month. But a difficult external environment makes it hard to sustain those rallies until the dollar turns.     EUR/USD Late cycle economies will keep the dollar bid Current spot: 1.0241 • Defining business cycles has been a hazardous job over recent years, but it looks pretty clear that the US is a late-cycle economy with high inflation and low growth. This stage of the cycle is synonymous with inverted yield curves – which we have today. The dollar typically stays bid in this part of the cycle until convictions grow that the Fed will ease, and US 2-year yields start dropping. That is probably a story for 1Q23 and not today. • We look for another 125bp of Fed hikes this year and just 50bp from the ECB (in Sep.). Risks look skewed to even higher US rates. • With Europe entering recession on the back of a looming energy crisis this winter, EUR/USD can stay near the lows for 2H22. USD/JPY Staying supported Current spot: 133.44 • USD/JPY has found some good support under 132 and should stay reasonably supported for 2H22. Expect surveys of the Japanese buy-side in September to show greater allocations towards unhedged foreign bond purchases. US Treasury yields pay 250bp+ over JGBs and it is too expensive to hedge those US bond investments – now 3% p.a. through the 3m JPY forwards. • The Fed Jackson Hole of Aug 25-27th looks a dollar positive event risk. It is far too early for the Fed to signal the all-clear on inflation. The bigger risk is that 2023 Fed easing is priced out. • Like the euro, the yen is suffering from the negative terms of trade shock. These indices are at the worst levels of the year. GBP/USD Slip-sliding away Current spot: 1.2098 • GBP/USD remains vulnerable on the back of continuing dollar strength and the UK economy trapped by slowing growth and a hawkish Bank of England. The only good news we have seen for sterling recently is that the Bank of Israel plans to double the pound’s weighting in its FX reserve portfolio! • A tricky environment for risk assets in 2H22 – slowing growth, tighter monetary conditions – suggests the growth sensitive pound will struggle. • The only thing helping it should be the BoE remaining hawkish all year – lifting rates 50bp to 2.25% in September – and at least  making sterling an expensive sell. No reprieve for Cable this year. Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
ECB's Knot: July Rate Hike Necessary, Beyond July Uncertain; Canadian CPI Supports Rates on Hold; Global Crypto Market at $1.2 Trillion; Oil Market Tightens with Russian Shipments Drop and China's Support Measures

Forex: GBP/USD Reached 1.1825, USD/JPY Hit 136.82 Yesterday | Stocks: S&P 500 Decreased By 0.22%

ING Economics ING Economics 24.08.2022 13:52
Asia trading to stay defensive ahead of Powell's speech at Jackson Hole on Friday.   Source: shutterstock Macro outlook Global: US stocks managed not to fall sharply yesterday. But that’s about the best that can be said of them. An initial rally in line with equity futures indications dissipated quite quickly, and it doesn’t feel like we will see any substantial moves higher this side of Powell’s Jackson Hole speech on Friday. On that front, Neel Kashkari yesterday was quoted talking about the need for the Fed to dampen inflation. No hints about a slowdown of rates or 2023 cuts. That could be a clue as to Powell's tone on Friday. The S&P500 declined only 0.22% on the day, the NASDAQ was flat from the previous day. Equity futures are again indicating a modest gain on opening today, but that may be about all we get from stocks for the time being. Bond markets were in the driving seat at the end of last week and the beginning of this week,  but yesterday, they did very little, which probably explains a lot of inaction in other markets. 2Y US Treasury yields fell just 1bp to 3.3%. The yield on 10Y Treasuries added 3.2bp rising to 3.046%. EURUSD managed to claw back some ground in lacklustre markets compared to this time yesterday, though it failed to hold above the parity level. The AUD did manage to push back above 69 cents, but it is looking pressured in early Asian trading today on a day with nothing major on the macro calendar. Cable also pushed higher, recovering to 1.1825 as did the JPY, which is now back down to 136.82. Asian FX was also a bit stronger over the last 24 hours, though there were notable omissions to that list, mainly from North Asia. TWD and KRW remain under pressure, along with the THB to a lesser extent. G-7 Macro: Eurozone Composite PMIs fell broadly as expected in August, with the headline index down to 49.2 from 49.9 in July, indicating economic contraction. Here’s a link to a note from our Eurozone team if you want more detail. And as we mentioned yesterday, July US new home sales fell to 511,000 on an annualized basis, even weaker than had been expected. This is the weakest sales growth in six years and will put further downward pressure on home prices, though probably not yet rents for some more quarters. Pending home sales today will add to the US housing story, together with July durable goods orders.   China: Sichuan's lack of hydroelectricity power has been partly solved by switching to coal-fired power. Though not a perfect solution in terms of Co2 emissions, at least the damage due to the lack of electricity to the economy is minimised. But at the same time, more cities are suffering from a lack of water for drinking and agriculture. The critical part is drinking water, and the government is delivering drinking water to affected locations. The damage so far of loss of agricultural produce in Jiangxi is CNY1.96 bn, which is still small compared to GDP of more than CNY114 tr in 2021. China is going to use cloud seeding to increase rainfall but that needs clouds in the sky to be thicker. As such, we do not expect there will be any immediate solution to this year’s drought. On real estate, more local governments have reduced non-first home mortgage down-payment ratios and mortgage rates. This should release more potential demand for residential properties, but we believe that home buying activity will only pick up when the public sees uncompleted projects finished, which could take more than a quarter. Korea: The business sentiment index showed that the manufacturing outlook for August rebounded to 82 (vs 80 in July), while the non-manufacturing outlook remained unchanged at 81 for the second month.  Although business concerns over future macro conditions have intensified, the recent stabilization of commodity prices appears to have had a positive effect on improving business sentiment among manufacturers. Indonesia: Bank Indonesia (BI) hiked rates unexpectedly yesterday ahead of a planned price increase for subsidized fuel.  We had expected BI to hike after the fuel price increase, but they opted to hike "preemptively" as both headline and core inflation are now expected to exceed the target this year.  BI also announced a new bond purchase scheme where the central bank would actively sell shorter-dated bonds while buying up the long end, resulting in a flatter yield curve.  The Operation Twist-like strategy would be deployed by BI to support IDR (attractive yields on the short end) while containing borrowing costs. What to look out for: Jackson Hole symposium Thailand trade (24 August) US durable goods orders and pending home sales (24 August) South Korea PPI inflation (25 August) Hong Kong trade balance (25 August) Bank of Korea policy (25 August) US initial jobless claims and GDP (25 August) Powell speaks at Jackson Hole symposium (26 August) Japan Tokyo CPI inflation (26 August) US Univ of Michigan sentiment (26 August) Read this article on THINK TagsEmerging Markets Asia Pacific Asia Markets Asia Economics Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Construction Activity in Poland Contracts in May: Focus on Building Decline and Infrastructure Investment

Jackson Hole Meeting Begins! USD/JPY May Be Turning Upside Down Shortly! Japanese Inflation Is Expected To Reach 2.5% In 2022

InstaForex Analysis InstaForex Analysis 25.08.2022 11:02
  So the day has come. Today the Federal Reserve symposium starts in Jackson Hole. The closer the event is, the more cautious the markets are. The USD/JPY pair is falling in the morning, but at the same time retains a huge growth potential. Why is everyone waiting for the dollar rally? On Thursday, the main economic get-together of August begins in the US state of Wyoming - the annual symposium of the Fed. Markets expect that in Jackson Hole, the US central bank will finally reveal its plans for further monetary policy. The culmination of the forum should be Friday's speech by the head of the Federal Reserve. Most analysts believe that Fed Chairman Jerome Powell will confirm the need to continue an aggressive course. This opinion is supported by a lot of hawkish comments from Fed members, which were made ahead of the symposium in Jackson Hole. Officials are still determined to fight high inflation. Of course, there is no denying the fact that recent signs of easing inflationary pressures have caused a sigh of relief from Fed policymakers. However, the path to achieving price stability is far from over, and the central bank is likely to continue to raise interest rates at the same rate. Amid such rhetoric, concerns that the US central bank may be inclined to a slower pace of rate hikes have significantly decreased in recent days. Currently, futures markets estimate the probability of a 75 bps rate hike next month at 60.5%. If tomorrow the Fed chairman gives even the slightest hint that this is real, we will see another enchanting rally of the dollar. However, while uncertainty remains about the Fed's future route, the greenback remains under pressure. This explains its current weakness. The DXY index fell by 0.15% on Thursday morning and retreated from its almost 20-year high of 109.27 to 108.47. And most of all, the "greenback plunged against the Japanese yen. The USD/JPY pair fell by 0.25% to the level of 136.775.     Why does the yen have no chance against the dollar? The Japanese currency benefits from a less sharp increase in Fed rates, since it has already suffered a lot this year from the aggressive course of the US central bank. Recall that the monetary policy of the Bank of Japan remains ultra-soft, despite the global trend of tightening and increasing inflationary pressure in the country. Unlike its colleagues, who are struggling with rising prices by raising interest rates, the BOJ stubbornly keeps the indicator at an ultra-low level. And apparently, the central bank will continue to bend its line. The BOJ's main task is not to suppress inflation, but to restore the economy, which has suffered greatly after the coronavirus pandemic. It is for this reason that the Japanese authorities continue to inject liquidity into the financial system by actively buying government bonds. Despite the measures taken, Japan's economy still cannot fully recover from the recession caused by COVID-19. This was stated today by BOJ board member Toyoaki Nakamura. The official warned that the prospects for the Japanese economy are clouded by another surge in the incidence of coronavirus, continuing supply constraints and a constant rise in commodity prices. He stressed that the BOJ should not abandon large-scale incentives to support the economy and switch to the side of the hawks just because everyone is doing so now. In his opinion, the tightening of monetary policy may become a serious deterrent for business, as a result of which economic growth will again be under threat. Bank Of Japan To Keep Being Dovish? Meanwhile, most analysts believe that the BOJ will stick to its dovish strategy for a long time. A survey conducted by Bloomberg showed that 16 out of 19 experts exclude the possibility of a change in the monetary rate of the BOJ before the expiration of Haruhiko Kuroda's term of office in April 2023. According to experts, the head of the Japanese central bank will stand his ground even if inflation in the country reaches the highest level of 3% in more than 30 years. In order for Kuroda to agree to the normalization of monetary policy, inflation should remain above 3% for at least six months, Bloomberg writes. And this, if you believe the forecasts, will not happen. Japanese Inflation Said To Reach 2.5% In 2022 According to Japanese economists, inflation will reach 2.5% at the end of this year, and by the end of 2022 it may drop to 1%. All this indicates that the BOJ will remain a black sheep among its colleagues. This scenario is extremely unfavorable for the yen. Due to monetary divergence, the Japanese currency has fallen in price against the dollar by almost 15% this year. Therefore, the position of the JPY is unlikely to improve much, even if tomorrow the head of the Fed does not meet the expectations of the markets and signals a slowdown in the pace of tightening. The yen can only benefit from this in the short term. The dollar will still have the main trump cards in its hands – several more stages of raising rates. Long-term review Company does not offer investment advice and the analysis performed does not guarantee results. Read more: https://www.instaforex.eu/forex_analysis/319863
Market Trends and Currency Positioning: USD Net Short Position, Euro and Pound Analysis - 22.08.2023

Forex: USD/JPY Has Risen By Almost 3% In August | US Dollar (USD) To Japanese Yen (JPY)

Kenny Fisher Kenny Fisher 26.08.2022 14:25
The Japanese yen is in negative territory today. USD/JPY is trading at 136.90 in the European session, up 0.34%. It has been a relatively quiet week for the yen, which is trading exactly where it started the week, around the 137 line. The month of August has not been kind to the yen, with USD/JPY soaring 2.75%. The US dollar is again in favor as the markets have tapered down their excitement that the Fed plans a dovish pivot. Does the Fed plan to let up or remain aggressive in its fight against inflation? We will certainly be smarter after Jerome Powell’s speech at Jackson Hole later today. A hawkish message from Powell should boost the US dollar unless investors zero in on any dovish remarks or projections, which could reignite speculation that the Fed will ease up on rate hikes. Tokyo Core CPI rises The Tokyo Core CPI index rose 2.6% in August, above the forecast of 2.5% and higher than the 2.3% gain in July. This marked the highest gain since October 2014. Policy makers in other major economies can only dream about inflation below 3%, but for Japan, rising inflation is a new phenomenon after decades of deflation. Inflation has exceeded the Bank of Japan’s target of 2% for four successive months and inflation is finally on the Bank’s agenda. Still, it is very unlikely that the BoJ will do anything more than tweak monetary policy, as its number one goal is to stimulate Japan’s fragile economy. The rise in inflation and the BoJ’s rigorous control of its yield curve has caused a steep deprecation of the yen, and an exchange rate of 140 may not be far off. There has been speculation in recent months that the Ministry of Finance could intervene to support the yen, but this has not happened until now and there is no indication that the 140 level is a magical ‘line in the sand’ that would trigger intervention.  For now, the main driver of USD/JPY remains the US/Japan rate differential, leaving the yen at the mercy of the movement of US Treasury yields. USD/JPY Technical USD/JPY is testing resistance at 137.03. Above, there is resistance at 137.03 1.3615 and 1.3504 are providing support This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. USD/JPY hits 137, Powell speech eyed - MarketPulseMarketPulse
S&P 500 Shorts Gain Ahead Of jackson Hole Events, USD/JPY - Yen Affected By CPI And EUR/GBP In Eyes Of A Possible 75bp Rate Hike

S&P 500 Shorts Gain Ahead Of jackson Hole Events, USD/JPY - Yen Affected By CPI And EUR/GBP In Eyes Of A Possible 75bp Rate Hike

Jing Ren Jing Ren 26.08.2022 08:22
USDJPY seeks support The Japanese yen finds support as August’s CPI hits an eight-year high. The trajectory remains up from the daily chart’s perspective and the latest pullback could be an opportunity to accumulate. A rally back above 137.40 at the start of the liquidation in late July is an encouraging sign that buyers are still in the game. However, the price action may stay choppy after a bearish RSI divergence and a fall below 136.70 triggered some profit-taking. 135.70 is the closest support and a bounce above 137.50 may send the dollar to 139.40. EURGBP consolidates The pound steadies over a higher chance of a 75bp rate rise by the BOE next month. The pair came under pressure in the supply area around 0.8510 and a follow-up break below 0.8430 put the bulls on the defensive. The euro is hovering above the daily support at 0.8390 which is a key level to keep last week’s rebound intact. 0.8460 is the first hurdle ahead and a close above 0.8510 may trigger an extended rally towards 0.8600. Failing that, the pair could be vulnerable to a sell-off to this month’s low at 0.8340. SPX 500 attempts to bounce The S&P 500 bounces as the shorts take profit ahead of Powell’s speech. The recent sell-off has stopped short at 4110, which is a daily support at the base of a bullish breakout. The level also coincides with the 30-day moving average, making it a congestion area. A bullish RSI divergence attracted bargain hunters with an initial pop above 4160. The bulls will need to lift the support-turned-resistance at 4210 before the recovery could gain momentum. A bearish breakout could trigger a fall to the psychological level of 4000.
Fed is expected to hike the rate by 50bp, but weaker greenback and Treasury yields don't play in favour of the bank

Fed Is Determined To Fight Inflation! Forecasts For USD/JPY And AUD/USD - 29/08/22

InstaForex Analysis InstaForex Analysis 29.08.2022 11:48
Federal Chairman Jerome Powell, speaking at a symposium in Jackson Hole, did everything to make the market finally realize that the central bank will stop at nothing in its plan to curb inflation in America. In the last article, we suggested that if the head of the Fed did not throw a surprise at the markets, then it would be possible to observe another local rally in the stock and other asset markets with a simultaneous increase in demand for government bonds and a weakening of the US dollar. And that would very likely have been the case if Powell hadn't made a targeted statement pointing out that while controlling inflation through higher interest rates, slower growth and softer labor market conditions would hurt households and businesses , "failure to restore price stability will mean much more pain" in the long run. It seems that weak hopes have finally collapsed, and this largely confirms the recovery in the growth of treasury yields amid falling demand for them. The yield of the 10-year T-Bond benchmark is already confidently staying above the 3% level and, after a slight downward correction, resumed growth. It is likely that a further sell-off in the government debt market will push it up to an immediate high of 3.5%. How will the US dollar behave in the context of continued aggressive rate hikes and growth in Treasury yields? We believe that it will have to further strengthen against major currencies, despite the fact that rates will also rise in other economically developed countries of Europe, Canada, Australia, and so on. Here it will be supported by the growth of Treasury yields and the flight of capital from Europe, as well as from countries with emerging economies, with the exception of Russia and China. In this case, we can expect the growth of the dollar index ICE to the mark first at 110, and then to 111 points. In fact, it will be possible to say that the dollar exchange rate against major currencies will linger for a long time at the level of the beginning of this century. As for the possible dynamics of the markets this week, the release of data on inflation in the eurozone, which is expected to rise again, and, of course, the latest figures on unemployment in America, will play a leading role here. Considering the Fed's general position regarding rates, we believe that if the data on the number of new jobs comes out no worse than expected, the US central bank will once again be confident that it is on the right course, fighting inflation and using the still strong labor market for this, trying to bring down the economy before serious problems arise, like a high temperature with aspirin, by aggressively raising interest rates. It is likely that after local consolidation, the smooth strengthening of the dollar will continue, and the markets will remain between the hammer of Fed rates and the anvil of inflation. Forecast of the day:     AUDUSD pair The pair is trading below 0.6865. Consolidation below this mark may be the basis for the pair's fall to 0.6800. USD/JPY pair The pair is at the level of 138.90. If it does not settle above it, it may correct down to 138.45, and then again rush to 139.40. Relevance up to 09:00 2022-08-31 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/320143
Analysis Of The EUR/JPY Pair Movement

Forex: USD/JPY Is Up To 139! What Are The Possibilities?

Kenny Fisher Kenny Fisher 29.08.2022 14:57
The Japanese yen has started the week with sharp losses, with USD/JPY rising as high as 139.00 earlier today. In the European session, USD/JPY is trading at 138.52, up 0.75%. The month of August can’t end soon enough for the yen, as USD/JPY has climbed 4.0%. The yen fell 0.78% on Friday, as Fed Chair Powell delivered a clear, no-nonsense message to the markets from scenic Jackson Hole. Dollar soars after hawkish speech from Powell Powell’s speech essentially reiterated what the Fed has been saying for weeks, but the markets reacted sharply, with equities tumbling and the US dollar recording strong gains. Investors finally acknowledged that the Fed means business and will not U-turn on policy, even if inflation drops in one or two reports. Powell appeared determined to avoid any repeats of the market euphoria after inflation declined unexpectedly in July, which raised speculation that the Fed was set to make a dovish pivot. Powell reiterated that the Fed would continue to use all its tools to fight inflation, acknowledging that high interest rates would remain for some time, and the Fed would be careful not to ease policy prematurely. The highly-anticipated speech was unusually brief, which may have been an attempt to prevent investors from looking for some dovish remarks in the speech and ignoring the gist of the speech. Powell used strong language to get his message across – saying that Fed tightening would cause “some pain” to the economy, and avoiding soothing terminology, such as “soft landing”. The Fed plans to continue to raise rates until it’s convinced that inflation has peaked and is on the decline and judging by the market’s reaction, investors heard Powell’s message loud and clear. US Treasury yields have moved higher, with the 2-year yield rising to 3.445% today, up from 3.032% on Friday, prior to Powell’s speech. This upward movement is weighing on the yen, which is sensitive to the US/Japan rate differential. If the upward trend continues, we could see an assault on the symbolic 140 level. . USD/JPY Technical USD/JPY has broken above resistance at 1.3759 and 1.3822. Above, there is resistance at 1.3891. 1.3701 and 1.3632 are providing support This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.   Source: Yen slumps as Powell pledges tighter policy
A Breakthrough! Japanese Yen (JPY) Helped By Data, Australian Dollar (AUD) Went Up Post Retail Sales Print

A Breakthrough! Japanese Yen (JPY) Helped By Data, Australian Dollar (AUD) Went Up Post Retail Sales Print

Jing Ren Jing Ren 30.08.2022 08:27
USDJPY hits major resistance The Japanese yen steadied after July’s unemployment met expectations. A close above 138.80 has put the greenback right under last July’s peak at 139.40, hitting a 24-year high. A bullish breakout would attract more buying interests and resume the uptrend in the medium-term. In the meantime, an overbought RSI may cause a limited pullback as intraday traders take profit in the supply zone. Fresh selling as a last attempt by the short side might drive the pair lower. 136.30 is a key support to keep the momentum going. Read next: Apple Stock Price Plunged On Friday! When Is The iPhone 14 Coming Out? iPhone 14 Is Expected To Be Announced Next Week! | FXMAG.COM AUDUSD sees limited rebound The Australian dollar bounced higher after upbeat retail sales in July. Its previous failed attempt to clear the psychological level of 0.7000 led to a new round of sell-off below 0.6850. This is a sign that the bears may have regained control of the price action. A bearish MA cross on the daily chart may further weigh on sentiment. After the RSI sank into oversold territory, some bargain hunting tried to push back. However, stiff selling pressure could be expected near 0.7000. 0.6800 would be the next stop when volatility returns. Read next: Bitcoin price could slide to $17,500 as regulators consider tightening rules around leverage| FXMAG.COM UK 100 breaks lower Equities remain under pressure as investors brace for more aggressive hikes from central banks. The FTSE 100 lost its momentum as it came closer to the triple top (7650) from the daily chart. An initial fall below 7460 triggered some profit-taking. Then a break below 7400 invalidated the latest rebound and forced buyers to bail out. 7310 is the closest support and the RSI’s oversold condition may cause a limited bounce. The index could be vulnerable to another round of liquidation unless the bulls manage to reclaim 7500.
Natural Gas Prices Extended The Recovery

Natural Gas Prices Still Fell Besides Russia Shuts The Key Nord Stream Pipeline Down. Dependence Coming To An End?

Saxo Strategy Team Saxo Strategy Team 30.08.2022 09:18
Summary:  Markets traded mostly sideways yesterday as the US dollar’s advance was stymied and US yields pushed back slightly lower. China continues to allow its currency to trade toward the lows for the cycle versus the US dollar as the 7.00 area nears in USDCNH. The euro bobbed back up toward parity versus the US dollar yesterday as natural gas prices fell even as Russia shuts the key Nord Stream pipeline down for a purported few days of maintenance.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) US equities stabilised yesterday following that knee-jerk reaction on Friday to the Jackson Hole presentations with S&P 500 futures touching and bouncing off the 50-day moving average closing above the critical 4,000 level. S&P 500 futures are trading around the 4,044 level this morning sandwiched between the 100-day moving average above this level and the 50-day moving average below suggesting a bigger move is shaping up in either direction. The next big shift in sentiment will be when we get the US August CPI print on 13 September as that is the key data point to shape expectations from current levels. Hong Kong’s Hang Seng (HSIQ2) and China’s CSI300 (03188:xhkg) Hong Kong and mainland China equities pulled back moderately, Hang Seng Index -0.9%. Tech names were weak. Hang Seng Tech Index plunged as much as 3% before bouncing off the lows to finish the morning session down 1.7%.  According to the Ministry of Industry and Information Technology, smartphone sales in China fell 2.9% YoY in the period between Jan and July. Despite reporting solid 1H results, China automaker, BYD (01211:xhg) slid 0.6%. In A-shares, mining stocks, gas, electric equipment, and auto parts underperformed, CSI 300 -0.5%. Pinduoduo (PDD:xnas), a leading Chinese eCommerce platform listed on Nasdaq reported strong 2Q results, showing stronger than peer gross merchandise value growth and better-than-expected margin improvement. US dollar and especially USDCNH The US dollar tried higher, but failed to follow through as risk sentiment stabilized and US Treasury yields eased back lower. The USDCNH rate, however, continues to push toward the high of the cycle, trading near 6.92 this morning. EURUSD trades near parity this morning after natural gas prices fell sharply in Europe yesterday and despite ECB Chief Economist Lane arguing for steady rate increases (pushing back against the pricing of a possible 75 basis point move at next week’s ECB meeting). Incoming data this week will be critical for USD direction. JPY weakness to bring back pressure on Bank of Japan USDJPY is back to testing its record July highs despite little change in money market pricing of the Fed rate path following Powell’s hawkish speech at Jackson Hole. The peak Fed funds rate is still priced in at 3.8%, while some of the Fed speakers have started to suggest 4%+ levels that may be needed to combat inflation. This brings the September dot plot in focus, but we get the jobs and CPI data before that as well. Any further upward re-pricing of the Fed path, if resulting in gains in US 10-year yields, could very well take USDJPY to new highs with Japanese yields still remaining capped due to the Bank of Japan’s yield curve control policy. If, however, US data underwhelms, the room on the downside for USDJPY is tremendous. Crude oil prices (CLU2 & LCOV2) Crude oil prices saw their best day in six weeks amid threats of a decline in supply from OPEC and production outages in Libya. Brent futures rose above $105/barrel although some softening was seen in Asia overnight, while WTI rose to $97/barrel. This follows news from last week that Kazakhstan’s exports of crude may be impacted for months because of damage to its port facility. Meanwhile, negotiations between Iran and the US over the revival of the 2015 nuclear deal could drag on for weeks, easing fears of an imminent surge in supply. Pro Farmer tour see lowest US corn production since 2019 The just completed Pro Farmer tour across the US grain belt helped drive corn futures in Chicago to a two-month high on Monday after the tour saw the US corn crop at 13.76 bn bushels, below USDA forecasts for 14.36 billion bushels. Pro Farmer predicted a soybean crop of 4.54 billion, in line with the USDA’s latest forecast. Wheat, supported by corn’s rally, touched its highest since July 12 despite news that Ukraine agricultural exports could rise to 6.5 million ton in October, double the volume in August.  The soybean vs corn ratio needs to stay low (favouring corn) ahead of the South American planting season in order to persuade farmers there to plant more of the fertilizer intensive crop. US Treasuries (TLT, IEF) US treasury yields eased lower yesterday. An interesting paper presented at the Jackson Hole conference at the weekend suggests that the Fed will have a hard time delivering on quantitative tightening without causing harm to financial market functioning, which could mean less supply of treasuries from the Fed if its shies away from reducing its balance sheet at the previously touted pace of $95 billion/month. Otherwise, incoming US data is the focus through the August CPI release on September 13. What is going on? Shell CEO warns of prolonged European gas crisis Shell CEO Ben van Beurden gave comments from Norway’s ONS conference, suggesting that Europe could face gas shortages for a number of winters. This disproves reports suggesting that Europe has already built reserves for the winter demand and reaffirms our belief that a move to broad-based energy supply will continue to be top of mind in the long run. In the near term, demand destruction appears to be the only possible solution, and Van Beurden stressed the need for efficiency savings as well as rationing. ECB Lane dials back on jumbo rate hike expectations ECB chief economist Lane was on the wires on Monday and hinted at a steady pace of rate hikes in a “step-by-step” manner rather than jumbo rate hikes. This appears to be a pushback against calls for a 75bps rate hike at the September meeting, as he made the case to allow the financial system to absorb the rate changes. Moreover, on inflation, Lane said long-term inflation expectations remain close to the two per cent target, while near-term inflation expectations are quite elevated. BYD reported 1H earnings at the high end of the preannounced range Chinese automaker BYD (01211) reported 1H revenue up 66% y/y to RMB 151bn. In terms of segments, auto revenue surged 130% y/y while mobile handset revenues contracted 4.8% y/y. Net profits jumped 206% to RMB 3.6bn, at the top end of the preannounced range of RMB 2.8-3.6bn. Volume growth (353K new energy passenger vehicles in 2Q, +265% y/y) beating market expectations despite two rounds of price increases in 2022 and supply chain disruptions. The company’s EV market share rose to 29% (vs 17% in 2021). Pinduoduo delivered Q2 results showing stronger than peer sales growth Pinduoduo (PDD:xnas), a leading eCommerce platform with strong penetration into agricultural products and online shoppers from rural areas, reported 1H total revenue up 36% y/y, far exceeding the 3% y/y consensus estimate. The company attributed the revenue growth to a recovery in consumption since mid-May, successful promotion campaigns, and 48-hour daily necessity supply packs for people facing lockdown. The company’s strong market position in rural areas and agriculture-related products also help it stand out from its rivals. In Q2, the company achieved a 20 %-point improvement in margin, reaching 33.5%, but the management cautioned investors that the margin compression was attributed to temporary cost savings early in the quarter and spending had increased since mid-May. Non-GAAP EPS came in at RMB 7.54, +161% y/y. Shares in Uranium companies and other nuclear-related companies are back in the spotlight Japan has signaled its openness to more nuclear power, at the same time, Tesla founder Elon Musk has applauded uranium as an energy alternative, during an energy conference in Norway. Uranium stocks moved higher as a result on Monday in the US, which boosted the Global X Uranium ETF up 7%, to its highest level since June 8. Shares in the Asia-Pacific region followed. Australian stocks saw the most significant moves given the country has the largest uranium reserves globally. Australia’s Paladin rose 11%, Deep Yellow 15% and Boss Energy 10%, while Rio Tinto (which owns a deposit) rose over 1%. Japan’s Mitsubishi Heavy Industries and Tokyo Electric Power gained 3%. Companies to watch in Europe, include Yellow Cake and Kazatomprom. What are we watching next? August U.S. job report is out on Friday There should not be a major surprise. The economist consensus expects a 300,000 payrolls increase in August and a stable unemployment rate at 3.5 % - this is a five-decade low. If this is confirmed, it all points to a healthy labor market (despite the moderate pace of job increases). Today, the U.S. government will also release July data on vacancies and quits. Expect job openings to remain elevated, thus pointing to resilient demand for labor. These figures are unlikely to play a major role at the September FOMC meeting since it is well-known that labor market data are lagged indicators. Inflation remains the main point of concern, as mentioned by Fed Chair Jerome Powell last week at Jackson Hole Symposium. August EZ CPI will be painfully high The consensus expects a new increase of 9 % year-over-year when the data will be released on Wednesday. This should convince European Central Bank (ECB) policy makers to raise borrowing costs by a sizable increase on September 8. At Jackson Hole, ECB’s executive board member Isabel Schnabel indicated the central bank has no other choice but to act with ‘determination’. This is a matter of credibility. According to Bloomberg, traders now price a 50 % chance of a 75-basis points rate hike in September. Earnings to watch Today’s earnings focus is China are lithium miners Tianqi Lithium and Ganfeng Lithium as the growth in electric vehicles sales is putting enourmous pressure on availability of lithium and prices of lithium carbonate. Baidu is another Chinese earnings release to watch today as the company’s footprint in online advertising will give insights into economic activity. Later in the US, earnings to watch are Crowdstrike in the cyber security industry and HP in computing hardware. Today: Woodside Energy, ICBC, China Yangtze Power, Muyuan Foods, SF Holdings, Shaanxi Coal, Midea Group, Tianqi Lithium, Ganfeng Lithium, Bank of Montreal, China Construction Bank, Bank of China, Great Wall Motor, COSCO Shipping, Partners Group, Baidu, Crowdstrike, HP Wednesday: MongoDB, Brown-Forman, Veeva Systems Thursday: Pernod Ricard, Broadcom, Lululemon Athletica, Hormel Foods Friday: BNP Paribas Fortis Economic calendar highlights for today (times GMT) 0700 – Spain Flash Aug. CPI 0830 – UK Jul. Net Consumer Credit 0830 – UK Jul. Mortgage Approvals 0900 – Euro Zone Aug. Confidence Surveys 1115 – ECB's Vasle to speak 1200 – Hungary Rate Decision 1200 – US Fed’s Barkin (Non-voter) to speak 1200 – Germany Aug. Flash CPI 1300 – US Jun. S&P CoreLogic Home Price Index 1400 – US Aug. Consumer Confidence 1400 – US Jul. JOLTS Job Openings 1500 – US Fed’s Williams (voter) to speak 1600 – ECB Speakers Holzmann and others 2030 – API's Weekly Crude and Fuel Stock Report 0130 – China Aug. Manufacturing/Non-manufacturing PMI Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher   Source: Financial Markets Today: Quick Take – August 30, 2022
Analysis Of The EUR/JPY Pair Movement

Forex: USD/JPY Tries To Attract More And More Buyers Before Next Jump!

InstaForex Analysis InstaForex Analysis 30.08.2022 10:53
Relevance up to 08:00 2022-08-31 UTC+2 The USD/JPY was trading at 138.42 at the time of writing. After its amazing rally, the price tries to consolidate and attract more buyers before jumping higher. Technically, the bias remains bullish despite temporary drops and or sideways movements. Fundamentally, the Unemployment Rate came in at 2.6% matching expectations. Later, the US data could be decisive. JOLTS Job Openings indicator is expected at 10.37M while the CB Consumer Confidence could be reported at 97.6 points. USD/JPY Minor Range! As you can see on the H1 chart, the price found resistance at the R2 (138.90) and now it moves sideways. In the short term, it's trapped between the R2 and the R1 (138.20) levels. As long as it stays above the R1, USD/JPY could resume its growth. Technically, the current sideways movement could represent an upside continuation pattern. Better-than-expected US data could push the pair higher. USD/JPY Forecast! A valid breakout above the R2 (138.90) and a new higher high could activate further growth at least until the 139.38 key level. This scenario could bring new long opportunities. Also, false breakdowns below the R1 (138.20) could help the buyers to go long. Still, a broader growth could be confirmed only by a valid breakout above the 139.38 historical level. Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Source: Forex Analysis & Reviews: USD/JPY consolidates ahead of breakout
The USD/JPY  Pair Above Maximum. Long Positions Gain  Profits

Japanese Yen Is Under Pressure As Japan Releases Retail Sales And Consumer Confidence

Kenny Fisher Kenny Fisher 30.08.2022 13:24
The Japanese yen is in positive territory today after starting the week with sharp losses. USD/JPY is trading at 138.22, down 0.34%. Japan releases a host of events on Wednesday, including retail sales and consumer confidence. Retail sales for July is expected to come in at -0.5% MoM, following a 1.4% decline in June. Consumer confidence remains weak, with a July estimate of 31.0, following the June read of 30.2. The Japanese consumer is in a sour mood and nervous about the economy, so it’s no surprise that she is holding tight to the purse strings as inflation continues to rise. Yen remains under pressure The yen remains under pressure and took it on the chin after Fed Chair Powell’s speech at Jackson Hole on Friday. Powell’s brief speech went straight to the point, pledging to continue raising rates until inflation was brought under control. Powell pointedly said that one or two weak inflation reports would not cause the Fed to U-turn on its tightening, a veiled reference to the market euphoria which followed the July inflation report, which was lower than the June release. With the equity markets taking a tumble after Powell’s speech, it appears that investors have finally gotten the Fed’s hawkish message. Powell’s speech removed any doubts about the Fed’s plans to continue raising rates, but the size of the increases will depend not just on inflation, but also on other economic data. Overshadowed by Jackson Hole, US Personal Income and Spending data was weaker than expected. As well, the Core PCE index, the Fed’s preferred inflation indicator, fell to 6.3%, down from 6.8% and below the forecast of 7.4%. If Friday’s non-farm payrolls report is weaker than expected, it would be a clear indication that the sharp increase in rates is having its desired effect and the economy is slowing. In such a scenario, Fed policy makers may be more inclined to raise rates at the September meeting by only 50 basis points, rather than 75bp. . USD/JPY Technical USD/JPY is testing support at 1.3822. The next support line is at 137.01 1.3891 and 1.4012 are resistance lines This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.   Source: Yen stabilizes after hitting 139
Further Downside Of The AUD/JPY Cross Pair Is Expected

Japanese Yen (JPY) And Australian Dollar (AUD) Are Still Standing!

Marc Chandler Marc Chandler 31.08.2022 12:41
Overview:  The rise in global interest rates continues. The US 10-year yield is a few basis points to near 3.15% and European benchmarks are mostly 5-6 bp higher. Of note, the sharp sell-off in UK Gilts is being extended. Yesterday’s 10 bp rise has been followed by another 14 bp surge today. Italian bonds are also getting hit. The 10-year yield is up a little more than 10 bp. The US dollar is mostly firmer against the major currencies, though the yen and Australian dollar are little changed. Among the emerging market currencies, a small number of Asian currencies, including the Chinese yuan and South Korean won are firmer, but most are under pressure. Equity markets in the Asia Pacific region were mixed, but the downside bias is evident in Europe, where the Stoxx 600 is lower for the fourth consecutive session and seven of the last nine. It is at new lows since mid-July. US futures are narrowly mixed and have a three-day loss in tow. Gold is also making new lows for the August and traded at $1711 having been above $1800 in the middle of the month. Iraq says its exports will not disrupted by the violent demonstrations helped the October WTI contract reverse lower yesterday (possible key downside reversal) and today it is testing the 200-day moving average near $89. US natgas is steady after falling 3.3% yesterday. Europe’s Dutch benchmark is up nearly 5% to snap a three-day slide of over 20%. Iron ore jumped nearly 3.8% to resurface above $100 and halt the two-day slide of almost 8%. December copper is slipping lower for the fourth session and is trading near four-week lows below $354. December wheat is slipping further after falling 2.7% yesterday.  Asia Pacific China's composite August PMI eased to 51.7 from 52.4. The contraction in the manufacturing sector continued with the PMI below 50 for the second consecutive month (49.4 vs. 49.0). The drought, power outages, Covid disruptions, and the ongoing drag from the end of the property bubble are hobbling the economy. The drop in supplier delivery times (49.5 from 50.1) are illustrative. Output and new orders continued to fall. The non-manufacturing PMI slowed to 52.6 from 53.8. Construction, reflecting, the emphasis of government efforts on manufacturing remained a bright spot at 56.5, albeit down from 59.2 in July. Japan's industrial production and retail sales were better than expected. Industrial production has surged 9.2% in June (month-over-month) in a response to the re-opening of Shanghai from Covid lockdowns and many expected a small pullback in in July. Instead, the preliminary estimate has it growing by another 1% in July. Autos, boilers, and turbines output grew, according to the report. Retail sales rose by 0.8% in July, more than twice the median in Bloomberg survey after the June series was revised to show a 1.3% decline rather than 1.4%. Autos, food, and beverages led the better-than-expected report. Today's data suggests a firm start to Q3. Economists expect the world's third-largest economy to expand by around 2.0% in Q3. The US claims, and echoed by many media outlets, that it is not seeking to change the status quo about Taiwan, but that Beijing is. Beijing claims that it is the US that is the antagonist. Both assessments seem correct. Leave aside Pelosi's visit and the other official visits, often using US military aircraft. Forget about reports of US military advisers in Taiwan for nearly two years. Consider a bill before Congress that proposes to declare Taiwan an important non-NATO ally. Consider Senator Blackburn's suggestion earlier this week that it is "may be" time to revisit the US one-China policy President Biden has intimated as much on several occasions only to have his comments "walked back." Beijing is no innocent bystander. It continues to harass Taiwan and challenge others in the South China Sea, including the Philippines and Japan. Yesterday, Taiwan fired warning shots for the first time at a PRC drone near an offshore island. Beijing struck a secret deal with the Solomon Islands a few months ago and one of the consequences has become clearer in recent days. Last week, a US coast guard ship was denied refueling permission by the Solomon Islands, which has declared a moratorium on all US Navy visits pending an update of its protocol of procedures. The US embassy was closed in the Solomon Islands nearly two decades ago, but plans on re-opening it, according to press reports earlier this year. The yen did not react much to the better-than-expected local data, and the firm US yields kept the US dollar firm. The greenback is little changed, but so far, holding below yesterday's high slightly above JPY139.05. It is also holding above yesterday's low just above JPY138.00, where the five-day moving average is found. The Australian dollar finished North American session on its lows yesterday, near $0.6855. There has been no follow-through selling yet today and the Aussie poked above $0.6900 before finding new offers, which is also where the five-day moving average is found. Position-adjusting around the expiration of options for A$400 mln today at $0.6875 and tomorrow for A$720 mln at $0.6867 may be contributing to the choppy tone. For the sixth consecutive session, the PBOC set the dollar's reference rate below market expectations (Bloomberg survey) as CNY6.8906 vs. CNY6.9083. The dollar gapped higher on Monday against the yuan. It entered the gap today, which extends to last Friday's high around CNY6.8730 and recorded a low near CNY6.8870. Its sideways movement follows a two-and-a-half week gain of about 2.3%. Europe France reported slightly softer inflation but also considerably weak consumer spending. The EU harmonized CPI rose 0.4% in August for a 6.5% year-over-year rise (6.8% in July). France caps on energy prices run until the end of the year, but the government is considering new measures and the EU is considering collective action. Service price inflation was sustained, and food and manufactured goods prices accelerated. Consumer spending fell 0.8% in July compared with a 0.2% decline median projection in Bloomberg's survey. June's 0.2% increase was shaved to 0.1%. The third quarter is off to a weak start. After contracting by 0.2% in in Q1, the French economy expanded by 0.5% in Q2. The 0.3% forecast for Q3 might be a bit optimistic. Italy's harmonized CPI jumped to 9.0% from 8.4%. Many economists had hoped for a dip to 8.2%. The month-over-month gain of 0.8% followed a 1.1% decline in July. Recall that yesterday's German inflation edged up to 8.8% from 8.5% and Spain's eased to 10.3% from 10.7%. The aggregate eurozone inflation figures were worse than expected. The headline rose to 9.1% from 8.9%. However, more troubling was the jump in the core rate to 4.3% from 4.0%. The median forecast in Bloomberg's survey looked for a 4.1% year-over-year core rate. The euro was sold to session lows (~$0.;9975) a few minutes before the report. The swaps market is pricing in a slightly greater chance of a 75 bp hike next week by the ECB, just shy of a 66% chance. It was about 50% at the end of last week. There is a dramatic interest rate adjustment taking place in Europe, which over time, will likely impact the foreign exchange market. Yesterday, we noted that the Germany two-year interest rate more than doubled in the past two weeks (from about 0.50% on August 16 to almost 1.20% on Monday and about 1.18% today). This has overwhelmed the increase in US yields and sliced the US premium to about 230 bp, the lowest since early July. The UK 2-year Gilt is not slouch. It has played a bit of catch-up yesterday and traded above 3% for the first time since 2008. It spent most of July and the first half of August below 2%. At the start of the year, the UK and US two-year yields were near parity. The more aggressive trajectory of Fed policy had given the US a 135 bp premium as recently as mid-August. The premium has collapsed to around 45 bp, the least since mid-March. After holding above $0.9900 on Monday's test, the euro reached $1.0055 yesterday before sold in North America back down to $0.9980. Today's low has been about $0.9975, and the intraday momentum indicators suggest it could stabilize for a little. The nearby cap may be around $1.0020. With the August CPI estimate behind it, the next two key events are this Friday's US jobs report and next week's ECB meeting. Sterling was sold to new two-year lows yesterday near $1.1620 and remains pinned in the trough today. It has recorded lower highs this week, and today, for the first, time has not traded above $1.1700. However, like the euro, the intraday momentum indicators for sterling suggest some consolidation is likely in the North American morning. America Two recent business surveys have caught our attention. First, a survey of CFOs by Deloitte found that 73% regarded persistent inflation as bigger threat than a recession, with the other 27% more concerns about a recession. What is a bit surprising by this is that judging from the recent earnings many businesses have been able to lift prices to more than covering rising costs, including wages. Adjusted pre-tax profits rose 6.1% in Q2 over Q1, which had seen a 2.2% decline quarter-over-quarter. By another metric that measures pre-tax profits as a percentage of gross value added, corporate profit margins rose 15.5% in Q2, the widest in more than 70 years. Separately, and somewhat less surprising, a survey by the US-China Business Council of its 117 members found over half attributed plans to cancel or delay investment plans in China due to its Covid-related restrictions. Most said the negative effects were reversible, but 44% said it would take "years" to restore confidence. ADP launches a new methodology for its estimate of private sector employment today. In its press release, it claims the report will be more robust, using granulated data based on payrolls covering 25 mln US workers. In addition, estimate of the current month's nonfarm private sector employment change, it will also provide weekly data from the previous month by industry and business size. A new pay measure is also being introduced. ADP did not provide an estimate for July, pending this methodological change. The median forecast in Bloomberg's survey of 15 economists is for a 300k increase, though the average is a bit lower at 280k. Yesterday's report on job openings (July JOLTS) was around 850k more than expected and the June series was revised higher. The Fed funds futures are pricing in about a 75% chance that the third 75 bp hike will be delivered next month. It was about a two-thirds chance before Fed Chair Powell spoke at Jackson Hole. The dramatically smaller than expected Canadian Q2 current account surplus reported yesterday (C$2.7 bln rather than the C$6.8 bln expected warns of downside risks with today's Q2 GDP report. The current account surplus in the first quarter was revised sharply as well (C$2.7 bln from C$5.0 bln). Bloomberg' survey of a dozen economist generated a median forecast of 4.4% annualized pace after 3.1% expansion in Q1. The monthly GDP figures are more troubling. The cumulative monthly increases n Q1 were 1.4%. June figures will be reported today. The median forecast calls for a 0.1% increase, which would bring the Q2 cumulative increase to 0.4%. We note that Canada's 10-year breakeven has risen from about 1.93% at the start of last week to 2.20% today. On the other hand, the five-year breakeven has eased about six basis points at the same time and is below 2.10% today. The Bank of Canada meets next week, and although the market flirted with another 100 bp increase, it appears to recognize a 75 bp move is more likely. Separately, a small and minor cabinet reshuffle is expected later today, with no policy implications.   The US dollar is trading at new highs for the month today against the Canadian dollar. Yesterday, it traded above CAD1.31 for only the third time this year but closed slightly below it. It is extending the leg up that began last week near CAD1.29 and has approached CAD1.3115. The spike high recorded in the middle of last month was near CAD1.3225. The intraday momentum indicators are stretched but the key remains the broader risk appetite (S&P 500 proxy). Initial support now may be in CAD1.3060-80 area. The greenback is trading firmly against the Mexican peso and is near a seven-day high above MXN20.22. The high set on August 19 around MXN20.2670 is the key to the immediate outlook. A move above it, could spur a move toward MXN20.35-37. But, if it holds, it may signal a consolidative phase. That said, note that the five-day moving average is poised to cross above the 20-day moving average for the first time since late July.    Disclaimer   Source: EMU August CPI at 9.1%, while the Core Rate Jumps to 4.3%
Analysis Of The EUR/JPY Pair Movement

Yen Is Recording An Increase. All Thanks To Industrial Production And Retail Sales

Kenny Fisher Kenny Fisher 31.08.2022 15:14
After starting the week with sharp losses, the Japanese yen has settled down. In the European session, USD/JPY is showing limited movement, trading at 138.66. Japanese data improves Japan posted solid numbers today, as retail sales and industrial production both improved in July. Retail sales climbed 2.4% YoY in July, (vs 1.5% in June), above the forecast of 1.9%. Significantly, household spending stayed strong, despite high inflation due to rising energy and food prices. Industrial production surprised with a gain of 1.0% MoM (vs. -0.5% forecast), after a huge 9.2% gain in June. Two straight months of gains point to strong pent-up demand and an easing in supply line disruptions. As well, the consumer confidence index rose to 32.5 in August (vs. 31.0) up from 30.2 in July. Consumer confidence remains weak, but the index improving for the first time in three months is welcome news. The host of positive numbers is an indication that the Japanese economy, although fragile, continues to recover, in large part due to pent-up demand following the easing of Covid restrictions. Still, the economy has a long way to go before the Bank of Japan will join its counterparts and tighten policy. The BoJ is primarily focused on stimulating the economy, and inflation remains much, much lower than what we’re seeing elsewhere. With the BoJ vigilantly maintaining its yield control, the Japanese yen remains at the mercy of the US/Japan rate differential, and higher US yields of late have pushed USD/JPY close to the 139 level. We could see the yen fall to 140 in the short-term, with no indication that Japan’s Ministry of Finance has any appetite to intervene and support the yen. Later today, the US releases the ADP Employment report. The market consensus for August stands at 288 thousand, which would be a strong improvement from the July gain of 128 thousand. This event could cause some brief volatility in the dollar, but it is not a reliable indicator for Friday’s non-farm employment report. In fact, NFP is expected to fall to 300 thousand, down from July’s massive gain of 528 thousand. . USD/JPY Technical USD/JPY is testing support at 1.3822. The next support line is at 137.01 1.3891 and 1.4012 are resistance lines This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Kuroda Stayed On The Sidelines And The Yen Responded With Losses

Japanese GDP Is Expected To Grow! Industrial Production Rose!

ING Economics ING Economics 01.09.2022 08:26
Today's monthly activity data is positive with both industrial production and retail sales improving, suggesting that the moderate economic recovery will continue this quarter – posing an upside risk to the current quarter's GDP Industrial production rose unexpectedly in July by 1.0% month-on-month 1.0% Industrial Production %MoM, sa Higher than expected Industrial production and retail sales improved in July Industrial production rose unexpectedly by 1.0% month-on-month, seasonally-adjusted (vs -0.5% market consensus), following a 9.2% surge in June.  Output forecasts for August and September also improved suggesting that solid production is likely to continue this quarter. By industry, automobile production and shipments improved. Keeping up with the production setbacks will normalise in a few months, but the solid gain for two consecutive months shows that the global supply bottleneck is fading and pent-up demand remains strong. Meanwhile, weak production of electronic components and devices suggests that global semiconductors are entering a downcycle for the second half of this year. Meanwhile, retail sales edged up 0.8% in July (vs -1.4% in June), which was also better than the market consensus of 0.3%. Household consumption remained strong despite the resurgence of Covid cases and high inflation. General merchandise and apparel fell, but more importantly, motor vehicles continued to rise firmly by 4.4% (vs 5.2% in June) for the second month in a row.  Separately, the consumer confidence index rose to 32.5 in August (vs 30.2 in July). Consumers showed a positive outlook as overall livelihood, income growth, employment, and willingness to buy durable goods advanced for the first time in three months.   Today’s reports signal that the Japanese economy continues to recover, mostly due to catch-up production gaps and the reopening effect. Industrial production rose in July for the second month in a row Source: CEIC Outlook for 3Q GDP and Bank of Japan policy The recent data releases from Japan are positive. Labour market conditions appear to have tightened while the growth outlook for the current quarter is also promising as monthly activity data and survey data have improved more than expected. Currently, we expect third-quarter GDP to grow 0.3% quarter-on-quarter sa (vs 0.5% in 2Q22), but an upside revision is on the way after confirming PMI and core machinery orders in two weeks. As for inflation, if the Japanese yen continues to weaken, hitting the 140 handle, then inflation could climb up to 3.0% year-on-year by year-end. We believe the recent positive outcomes are not good enough for the Bank of Japan to change its policy stance yet as it believes the recovery is still very fragile. On the other hand, Governor Haruhiko Kuroda pledged over the weekend to maintain the easing policy to support growth. Thus, we expect the Bank of Japan to stay pat at its September meeting.  Read this article on THINK TagsRetail sales Industrial Production Consumer confidence Bank of Japan Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
The Collapse Of The Silicon Valley Bank Weakened The Dollar And USD/JPY But Supported EUR/USD, AUD/USD, And GBP/USD

FX: NFP Is Expected To Hit 250K. This Number Can Ensure Us Of 75bp Fed's Move. Keep An Eye On USD/JPY...

ING Economics ING Economics 02.09.2022 09:28
The sell-off in bonds has continued to offer support to the dollar, with DXY touching 110.00 yesterday. Today, we think that a decent US jobs report (we expect 250k) might be enough to cement 75bp September hike expectations and keep the bullish sentiment on the dollar alive. USD/JPY acceleration above 140 may revamp risk of FX interventions Will today's US jobs data be enough to trigger another bullish dollar reaction? USD: Decent payrolls may be enough to keep supporting the dollar The ongoing major bond sell-off continues to have a net-positive effect on the dollar, and DXY briefly traded at 110.00 yesterday after another drop in all G10 currencies against the greenback. All considerations on whether the dollar rally is truly overstretched and bound for correction will likely have to wait for today’s jobs numbers out of the US. This is because the current market pricing for the Fed rate path still leaves some room for hawkish re-pricing. A 75bp rate hike in September is not fully in the price (currently 68bp), and despite the recent flattening in the rate expectations curve, further evidence of tightness in the jobs market can encourage speculation about a 4.0%+ peak rate and/or prompt the residual rate cuts (worth around 35bp) for 2023 to be priced out. The question now is whether jobs data will be enough to trigger another bullish dollar reaction. Our US economist expects a 250k headline read today: a widely expected slowdown from July’s 528k surprise, but with the unemployment rate staying at 3.5%, no slowdown in wage growth and the lack of qualified staff still being the main hindrance to job growth, the overall message for investors may still be broadly encouraging. We suspect that the actual consensus is lower than the 300k indicated by major data providers, as the ADP numbers released earlier this week likely triggered revisions lower in market expectations. Our suspicion here is that the market may not really need a big surprise to fully price in a 75bp hike in September, and a respectable jobs report may be enough to trigger another leg higher in the dollar today. A break above 110.00 in DXY may unlock further upside for the dollar. Francesco Pesole EUR: Ready to re-test 0.9900 The main data release to watch today in the eurozone is PPI figures for July, which should mark a clear acceleration although will likely have limited market implications. EUR/USD has recovered a bit of ground in overnight trading, likely on the back of the news that Russia should resume gas flows through the Nord Stream pipeline at 20% of capacity on Saturday. It is, however, a quite limited positive reaction by the euro, which likely denotes how markets remain very cautious to price out the risks of a complete cutoff in gas supplies in the coming months.   As per the USD section below, we see the potential for another round of dollar appreciation today after the NFP, which may force a re-test of 0.9900 in EUR/USD before markets close for the weekend. Francesco Pesole JPY: Getting too weak for comfort? USD/JPY pushed above 140 yesterday without much fanfare. Shorter-dated implied option volatilities were still around the 12% area (versus 15%+ a few months ago) suggesting investors have downscaled fears over possible Japanese FX intervention to sell USD/JPY. While we all acknowledge that Japanese authorities would be trying to turn back the tide here (USD/JPY is above 140 for good macro reasons) we should not discount intervention completely. The last time USD/JPY was above 140 in the late 1990s, the Japanese were intervening. Any sharp near-term move to the 142/143 would probably spark a much sharper verbal protest from Japanese authorities and put intervention back on the agenda. Chris Turner CEE: US dollar strikes back Friday's calendar in the region is empty and CEE FX should absorb yesterday's drop in EUR/USD. Additionally, today's US payrolls could come into play and potentially trigger this week's gains correction. As we mentioned yesterday, we see the gains of recent days as overdone, leaving the region vulnerable to global news flow. We see the Hungarian forint as the most vulnerable at the moment, benefiting from Tuesday's National Bank of Hungary decision and headlines from the negotiations between the government and the European Commission. However, the gains are mainly driven by positive sentiment and are not underpinned by rising interest rate differentials. At the same time, the forint remains heavily dependent on gas price movements, further complicating the current situation. The same story applies to a lesser extent to the Polish zloty, but it may benefit from Wednesday's market rate hike following surprisingly high inflation. We also see weaker values for the Czech koruna, which is below the Czech National Bank intervention level of 24.60-24.70 EUR/CZK this week. The daily central bank balance sheet data suggests that the CNB basically did not need to intervene the previous week, and the last few days do not suggest central bank activity either. However, if EUR/USD continues to move lower, the CNB can be expected to return to the market. Frantisek Taborsky Read this article on THINK TagsYen Jobs FX Daily FX Dollar Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
The USD/JPY Price Seems To Be Optimistic

Shocking: USD/JPY Broke 140.00! Nasdaq Decreased, But S&P 500 Gained Yesterday!

ING Economics ING Economics 02.09.2022 10:52
Asian markets in limbo ahead of US jobs report while Asian FX feels the heat from USD strength.  Source: shutterstock Macro outlook Global markets: The slow bleed in US equities continues to show signs of clotting, though there was still a small fall from the NASDAQ yesterday even though the S&P500 managed to eke out a slight (0.3%) gain on the day. Futures markets are not signalling any intent ahead of the September payrolls release later today. Shorter dated US treasuries trod water yesterday. The yield on the 2Y note rose only 0.6bp – essentially flat – though 10Y yields kept pushing higher and added 6.1bp to take them to 3.253%. We still think there is a little more upside to come from these over the coming weeks, but let’s see how payrolls pans out first before we start thinking about direction too seriously. The EUR didn’t manage to buck the rest of the G-10 for long, and it has dropped back below parity against the USD to stand at 0.9948 now. That move has given other G-10 currencies another push lower, with the AUD now at 0.6789 after a weak day yesterday. Cable has dropped through another big figure, and is currently trading at 1.1545, virtually back to Covid-lows. And just as we intimated in yesterday’s note, the JPY did indeed breach 140, and is at 140.07 now. What’s going to stop the USD run? Right now, it’s very hard to come up with a convincing-sounding answer to that. Asian FX had a lousy day yesterday. The KRW was the worst-performing currency, pushing back up through 1350. The THB, PHP and SGD all lost around 0.4-0.5% vs the USD on the day. The latest comments from the Fed’s Bostic, that the Fed still has “work to do” to control inflation, add nothing to the fed/inflation/rates picture. Other regional news that may weigh on markets today includes China’s latest battle to keep Covid under control, involving more lockdowns in Shenzen, Chengdu and Dalian, more US restrictions on technology exports to China, and continued tension across the Straits of Taiwan. G-7 Macro: As mentioned, it is US payrolls Friday today. The median forecast on Bloomberg is for employment growth of just under 300,000 with an unchanged (3.5%) unemployment rate and average hourly earnings growth of 5.3%YoY.  Not much else matters today. Korea: Headline inflation slowed to 5.7% YoY in August (vs 6.3% in July) after six months of accelerating. The figure was also lower than the market consensus of 6.1%. The seasonally adjusted monthly growth rate declined by -0.23% for the first time since October 2020, mainly due to fuel-tax cuts and a drop in gasoline prices. We think inflation has now passed its peak.  But fresh food prices are still expected to rise further in September and manufactured food prices are also scheduled to rise after the Choseok holiday. Also, utility fees - city gas and power – will rise again in October, and some local governments are planning to increase service fees too. Consequently, inflation will likely remain above 5% until the end of the year.  The Bank of Korea (BoK) will take some comfort from today’s data but will continue to stay on a hiking path at least until the end of the year. However, the weaker-than-expected inflation print supports our view that the BoK will end its hiking cycle at 3.0% in November. What to look out for: US non-farm payrolls South Korea CPI inflation (2 September) US non-farm payrolls, durable goods orders and factory orders (2 September) Read this article on THINK TagsEmerging Markets Asia Pacific Asia Markets Asia Economics Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
How Far Can USDJPY Go?

How Far Can USDJPY Go?

Jing Ren Jing Ren 02.09.2022 12:24
The yen has weakened to the lowest level since 1998, with the USDJPY popping above the 140 handle. Through the week, the pair rose 1,9%. In a period of economic uncertainty, usually traders would expect the yen to get stronger on safe-haven flows. Is the yen no longer a safe haven? There's more to the picture. And that could help us understand if there is a correction coming or the trend will continue. The driving forces In the short term, the dollar has gotten stronger ahead of NFP data. This is because traders are banking on the employment data to be strong, well above the "normal" 200K rate seen before the pandemic. With fast growth in jobs, the Fed would have free reign to keep hiking, pushing yields even higher. So, from that we can see a potential source of a correction in the near term: if NFP figures disappoint. After the blow-out figure from last month, investors might be a little overly optimistic about a beat in jobs creation, which means even if the figures come in as expected, it could disappoint the more speculative traders. The bigger picture The short term dynamics are an example of the effects of the long-term situation. The major deviation between the two premier safe haven currencies is, broadly speaking, a difference in monetary policy. The US is facing high inflation, prompting the Fed to raise rates. Japan has relatively low inflation (even though it has poked above target recently), and rates have remained negative. With the Fed pursuing an aggressive hiking policy, the yield spread has widened, making it attractive for carry trading against the yen. The potential for a reversal is that Japan starts experiencing inflation and forces the BOJ to start easing. The weaker yen translates into higher import prices, which in turn implies inflationary pressures. However, the global slowdown could also be translating into lower retail sales in Japan, which in turn minimizes the inflationary pressure. As a result, the BOJ can remain apart from the other central banks desperately fighting inflation, and instead work on promoting economic growth. It's all about the expectations A lingering question might be: Sure, the Fed is raising rates, but inflation is much higher than interest. Doesn't that mean a real negative rate? Yes, it does. However, the inflation that we're seeing now is in the past. It's comparing prices now to prices a year ago. What matters for investors is how much inflation is expected over the next period. Fed tightening implies that inflation should get under control, meaning that holders of US bonds will get the benefit of higher interest rates and lower inflation. Meaning that forward yield expectations are still positive - or, at least, better than what traders might expect to get from yen bonds. While the BOJ is on an accommodative track, inflation would have to increase substantially before rates rise. Meaning there is more inflationary risk in a Japan that isn't actively fighting inflation, than in a US that is actively trying to get prices down. It isn't that the yen isn't a safe haven, it's that the US has moved more into offering a better rate of return on fixed income.
Kuroda Stayed On The Sidelines And The Yen Responded With Losses

So After NFP Release, USD/JPY Hasn't Been Changed A Lot

Kenny Fisher Kenny Fisher 02.09.2022 22:01
It has been a week to forget for the Japanese yen, as USD/JPY has climbed 2.23% and has pushed across the symbolic 140 line. In the North American session, USD/JPY is trading at 140.57, up 0.26% on the day. US Nonfarm Payrolls within expectations There was plenty of anticipation ahead of today’s nonfarm payrolls, with a consensus of 300 thousand. A wide miss of this mark could have triggered some sharp movement from the US dollar, as the Fed is relying on a strong labour market in order to continue delivering large rate increases. In the end, nonfarm payrolls was pretty much as expected, with a gain of 315 thousand. The dollar’s reaction has been muted, with USD/JPY posting small gains in the North American session. Dollar/yen punches above 140 The US dollar has flexed its muscles this week and has pushed the ailing yen above the 140 line. With the yen at its lowest level since 1998, speculation has risen that Japanese officials might intervene in order to boost the yen. In truth, the same concerns were aired when dollar/yen broke above 125 and then 130. There is no magic about the 140 level, keeping in mind that the last time Japan intervened to boost the yen was in 1998, during a financial crisis in Asia, when USD/JPY hit 146. In the past, Japan’s Ministry of Finance has warned that it is watching the yen’s depreciation with concern, but the lip service has not translated into any action. The Bank of Japan has zealously defended its yield curve control policy (YCC), which has kept a tight lid on the rates of Japanese government bonds, and the widening US/Japan rate differential has led to a sharp depreciation of the yen. Rather than outright currency intervention, the BoJ could shift its YCC in order to prop up the yen. However, the BoJ hasn’t shown any interest in such a move, as its primary focus has been keeping rates ultra-low in order to boost the fragile economy. Bottom line? The yen has more room to fall, and a forceful response from Tokyo doesn’t appear likely anytime soon. . USD/JPY Technical USD/JPY has support at 140.12 and 138.91 The next resistance line is at 141.84, followed by a monthly resistance line at 144.73 This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Yen edges lower as NFP close to forecast - MarketPulseMarketPulse
Rising Tensions in Japan Amid Currency Market Concerns and BOJ Insights

Decrease In The New York Stock Exchange. Futures On The USD Index

InstaForex Analysis InstaForex Analysis 05.09.2022 08:22
At the close on the New York Stock Exchange, the Dow Jones fell 1.07% to a one-month low, the S&P 500 fell 1.07%, and the NASDAQ Composite fell 1.31%. Chevron Corp was the top performer among the components of the Dow Jones index today, up 2.31 points or 1.49% to close at 157.85. Salesforce.com Inc rose 0.16 points or 0.10% to close at 153.69. Walgreens Boots Alliance Inc rose 0.01 points or 0.03% to close at 35.27. The losers were 3M Company shares, which lost 3.98 points or 3.17% to end the session at 121.65. Honeywell International Inc. shares rose 2.01% or 3.84 points to close at 186.89, while Procter & Gamble Company shed 1.78% or 2.48 points to close at 137.16. Leading gainers among the S&P 500 index components in today's trading were CF Industries Holdings Inc, which rose 4.34% to hit 106.86, Hess Corporation, which gained 3.83% to close at 120.91, and also shares of The Mosaic Company, which rose 3.79% to end the session at 54.84. The biggest losers were DISH Network Corporation, which shed 4.49% to close at 17.01. Shares of Generac Holdings Inc shed 4.13% to end the session at 223.39. Quotes of Zebra Technologies Corporation decreased in price by 3.92% to 297.60. Leading gainers among the components of the NASDAQ Composite in today's trading were Venus Concept Inc, which rose 54.87% to hit 0.54, Sunrise New Energy Co Ltd, which gained 31.46% to close at 2.80. , as well as shares of Advanced Human Imaging Ltd ADR, which rose 29.90% to close the session at 1.26. The drop leaders were PolyPid, which fell 73.47% to close at 1.43. Shares of Shuttle Pharmaceuticals Inc lost 71.56% to end the session at 14.90. Quotes of ShiftPixy Inc decreased in price by 33.92% to 13.60. On the New York Stock Exchange, the number of securities that fell in price (1,797) exceeded the number of those that closed in positive territory (1,297), while quotes of 136 shares remained virtually unchanged. On the NASDAQ stock exchange, 2,338 companies fell in price, 1,371 rose, and 257 remained at the level of the previous close. The CBOE Volatility Index, which is based on S&P 500 options trading, fell 0.35% to 25.47. Gold futures for December delivery added 0.70%, or 12.05, to $1.00 a troy ounce. In other commodities, WTI October futures rose 0.59%, or 0.51, to $87.12 a barrel. Brent oil futures for November delivery rose 1.02%, or 0.94, to $93.30 a barrel. Meanwhile, in the forex market, the EUR/USD pair remained unchanged 0.17% to 1.00, while USD/JPY fell 0.02% to hit 140.18. Futures on the USD index fell 0.12% to 109.55.       Relevance up to 04:00 2022-09-06 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. Read more: https://www.instaforex.eu/forex_analysis/291315
Asia morning bites - 16.05.2023

Forex: It's Hard To Believe! Stock Market Status May Affect USD/JPY!

ING Economics ING Economics 05.09.2022 08:53
With USD/JPY now above 140, we have been asked several times whether the yen has lost its safe haven status. We think two factors are important drivers here: the nature of this year's shock which has seen Japan's trade surplus wiped out, and the extreme juxtaposition of Fed and Bank of Japan policy. Don't bet on a USD/JPY turn this year Yen loses its safe haven shine With USD/JPY trading above 140 and financial assets under pressure, one could think that the yen is losing its status as a safe haven currency. The data support that idea. In 2020, when the world was rocked by the pandemic, USD/JPY had a 0.35 positive correlation with the MSCI World equity benchmark. That meant that when equities fell, the JPY typically outperformed against the dollar – i.e. JPY as a perceived safe haven. This year the USD/JPY correlation with equities is now zero – suggesting the JPY has lost some safe haven properties. Why? I’d say it’s down to two main factors – a) the nature of the crisis and b) the juxtaposition of the US and Japanese macro-financial policies.  On the former, the war in Ukraine has seen energy prices surge. Given that Japan imports all its fossil fuel energy, Japan’s terms of trade have collapsed – that is the price Japan receives for its exports versus what it pays for its imports. That is a large negative income shock. That has been most visible in Japan’s trade account. Last summer Japan was earning JPY6trn a year on trade. Over the last 12 months, that trade surplus has swung to a JPY6trn deficit on higher energy bills. A safe haven currency typically needs to be backed by a strong trade surplus – such that there is a natural demand for a currency in a crisis. The JPY has lost that backing from trade. On the US-Japan story, the US Federal Reserve and the Bank of Japan (BoJ) are just about as far apart as you can get.  The hawkish Fed has raised rates aggressively this year and promises to do more. The BoJ is one of the very few dovish central banks in the work (joined recently by the People's Bank of China). It is still engaging in quantitative easing. In practice, this now means that holding a 3m USD deposit pays 3% per annum. Hold a 3m JPY deposit and you will still be charged 0.10% for the pleasure. This 3%+ spread in rates really raises the bar for the JPY to outperform as a safe haven currency. JPY would rally if equities fell hard enough... Two final points – I suspect that if US equities fell hard enough that the Fed tightening cycle was substantially re-priced lower (and we haven’t seen too much of that this year), the JPY would outperform again and USD/JPY would drop. I also suspect USD/JPY is moving into a zone where Japanese policymakers will show more overt concern – they intervened to sell USD/JPY back at these levels in the late 1990s. But equally, we are a long way from a 1980s Plaza-type accord to weaken the dollar in general. That would require the Fed needing to cut rates (highly unlikely this year) or the BoJ to hike rates (again unlikely). So given the way things are going this year, a move to 150 certainly can’t be ruled out.  USD/JPY and BoJ intervention levels. BoJ sold USD/JPY above 140 in the late 90s Source: Japanese Ministry of Finance, ING Read this article on THINK TagsYen Federal Reseve Dollar Bank of Japan Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
For What It Is Worthy To Pay Attention Next Week 23.01-29.01

The Bank Of Japan Must Change Policy For JPY, Crude Oil Hits Lowest, Norway Is Open To Discussing Gas Delivery

Saxo Bank Saxo Bank 07.09.2022 10:11
Summary:  Markets are jumpy, with US equities trading back and forth over the key supports at the former lows of the cycle in the major indices. The action settled near those important support levels and then futures traded softer overnight in an Asian session that saw the downward spiral in the Japanese yen accelerating despite stern words from Japan’s Ministry of Finance. It seems only a change of course from the Bank of Japan has the chance of slowing the yen’s slide.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) US equities continued to slide lower yesterday as the US 10-year yield advanced to close at 3.35% getting closer to the recent high of 3.5%. The culprit was the much stronger than expected ISM Services yesterday pushed the Fed Funds forward curve lower indicating higher policy rates for longer. S&P 500 futures fell 0.9% and is trading lower again this morning in early European trading hours sitting around the 3,897 level. Hong Kong’s Hang Seng (HSIU2) and China’s CSI300 (03188:xhkg) Hong Kong stocks notably underperformed their mainland counterparts for the second straight session. Hang Seng Index lost 1.7% and Hang Seng Tech Index dropped 2.4% while CSI300 was flat. Heavyweight financial names HSBC (00005:xhkg) and AIA Group (01299:xhkg) tumbled nearly 3%. China internet names traded in the Hong Kong bourse also contributed to leading the indices lower, Alibaba (09988:xhkg) and Tencent (00700:xhkg) dropped about 2%, and Bilibili (09626:xhkg) fell by almost 6%. The Covid19-related lockdowns, a weakening yuan, the disappointing August trade data from China, and the rise in US interest rates hurt the market sentiment. Strong USD on the rampage once again While the focus is chiefly on the cratering Japanese yen (see more below), the US dollar is broadly stronger again and thriving on higher US treasury yields after a strong US August ISM Services data point yesterday, as well as on weaker risk sentiment. EURUSD found more separation from parity and traded to new lows briefly yesterday ahead of the ECB meeting tomorrow, while AUDUSD, for example, trades this morning below its lowest daily close for the cycle, if not below the intraday low of 0.6682 from July. The USDCNH bears watching as well, as 7.00 has now rolled into view. JPY downward spiral intensifies as global yields jump The USDJPY spike accelerated again yesterday in the wake of strong US data, as Market the world wonders how long Japan can allow the pressure from rising yield differentials globally to pile into the country’s currency, given the Bank of Japan’s insistence on capping yields out to 10 years under its yield-curve-control policy.  The situation has created a pressure cooker of a situation on the yen and tremendous volatility, which could get worse still if US 10-year treasury yields continue back higher toward the 3.50% peak from June. The next important economic data point for the US is Monday’s August CPI – and the next chart focus in USDJPY is 147.66 the 24-year high of 1998. Stern verbal warnings from Ministry of Finance officials overnight hardly even registered on the market. The BoJ must change policy for JPY to find its lows. Crude oil (CLV2 & LCOX2) Crude oil hits lowest since January as demand concerns have once again overtaken worries about supply with China lockdowns and restrictions on movements now impacting 46 cities. In addition, a surging dollar, weaker equity markets and central banks in hiking mode continue to negatively impact the general level of risk appetite. In Europe the energy crisis has raised concerns about a ‘Lehman’ moment with utilities buckling under the weight of growing margin calls. Instead of supporting prices, the token 100k b/d OPEC+ production cut announced on Monday has had the opposite effect with the market concluding the group worries about demand going forward. WTI futures slumped below $86/barrel while Brent dropped below $92. Focus on EIA’s Short-Term Energy Outlook for September and API’s weekly inventory data. US Treasuries (TLT, IEF) US Treasury yields rose sharply in the wake of the strong US ISM Services survey for August, which suggests that the US’ dominant services sector remains in strong expansion, while price pressures for the month eased. The 10-year yield benchmark traded near 3.33% this morning, above all but the highest two daily closes back in a mid-June spike to 3.50%. Above current levels, US treasury yields are likely to dominate focus across markets, likely driving US dollar and risk sentiment direction. What is going on? Signs of a flagging world economy send commodities lower One week into September, the Bloomberg Commodity Index trades down more than 4% with losses seen across all sectors led by energy and industrial metals. The prospect of aggressive Federal Reserved Monetary tightening has lifted the dollar to a record against a broad basket of currencies while the yield on ten-year US government bonds has climbed to 3.34%, just below the 3.5% June peak. In addition to rising interest rates, soon also from the European Central Bank, the market is also dealing with an energy crisis in Europe and lockdowns in China hurting growth and demand in both areas. With the stock market suffering declines and geopolitical tensions being elevated, some safe-haven demand has helped cushion precious metals, the best performing sector so far this month. Xi Jinping invokes “whole nation system” With the recent US restrictions on Nvidia selling its most advanced AI chips to Chinese customers Xi Jinping invoked the so-called whole nation system to coordinate and allocate resources for China to become fully independent from the technologies that the US is trying to curb going to China. This speech bolsters our view that the world is moving towards a bipolar world with more fragmented supply chains and economies. US ISM services in further expansion While the S&P Global Services PMI survey continued to signal weakness with a 43.7 revised print for August, the BLM’s historically more close watched ISM Services survey on the other hand expanded further to 56.9 from 56.7 in July, slightly above expectations. Business activity accelerated to 60.9 from 59.9, while the prices paid component remained elevated at 71.5, in contrast to the decline we saw to 52.5 for the manufacturing sector. New orders rose to 61.8 from 59.9 and employment rose into expansionary territory at 50.2 from 49.1. Norway says it is open to discussion of energy price caps in Europe Norway is the largest supplier of natural gas to Europe and the country’s prime minister Jonas Støre said the country is open to discussing shorter- and longer-term gas delivery arrangements that cap prices, saying that the discussions would have to occur with the country’s oil and gas producers, chiefly Equinor, but that it is important to not jeopardize production levels. France’s nuclear energy production is in free fall More than half of the fifty-six nuclear reactors are down due to corrosion issues on reactors which could take years to solve. Nuclear production is now at its lowest point, around 23,000 MWh per day on average versus 40,000 MWh in the same period last year. So far, this has not created a power emergency as electricity demand is usually not elevated during the summer (around 45 GWh per day). But it might become an issue when higher winter consumption will push electricity demand around 80-90 GWh on average. This could cause an electricity shortage at the worst time ever (see Chart of the Week : The energy crisis is hitting France, 29 August 2022). China’s exports in August slowed more than expected In U.S. dollar terms, China’s exports in August come in weaker at +7.1% y/y (Bloomberg consensus: +13% y/y; July: +18.0% y/y). The resurgence of pandemic control restrictions, production disruptions due to power rationing, weaker demand from U.S. consumers, and a high base last year contributed to the deceleration. 46 cities in China are implementing various degrees of lockdowns or restrictions on mobility, affecting nearly 300 million people and close to 25% of the country’s GDP. Imports also were slower than expected, coming in at +0.3% y/y (Bloomberg consensus +1.1% y/y; July: +2.3%). Australia assures it will remain a reliable LNG supplier Australia’s Minister for resources has again been called on to ‘pull the trigger’ and limit gas exports given the projections show Australia will have an energy shortage next year. The Minster said although it has the matter under control, it cannot guarantee it won’t be limiting exports. Japan imported AUD 17bn of the fossil fuel from Australia last year. As such Japan says it’s watching the situation closely. What are we watching next? Bank of Canada to hike rates today After a July rate hike of 100bps, Bank of Canada meets again today. The consensus is calling for a 75bps rate hike to bring rates to a restrictive territory, given that inflation continues to run well above target and economic demand is holding up well. The pace of tightening is however likely to slow down in October, and so the messaging will be key to watch at today’s meeting. Canada’s Ivey PMI for August is also out today after dipping sharply in July to just below 50. ECB meeting on Thursday A 75-bp hike that takes the policy rate to 0.75% is the favoured scenario, although not fully priced. To surprise the market and bolster its claim that it is serious about getting ahead of inflation, the ECB will have to move 100 basis points. Guidance will also be important, as the ECB is expected to take the rate to at least 1.5% through the December meeting (two more meetings after the meeting tomorrow). Several key points will be discussed at the EU emergency energy meeting on 9 September According to Reuters, the EU energy ministers will try to find an agreement on a gas price caps (yesterday, European gas jumped 31 % as Russia kept Nord Stream link shut) and on providing companies facing high margin calls emergency liquidity support (several utilities are already on the edge of bankruptcy in Germany and in Austria, for instance). The ministers will also focus on reforming more deeply the European electricity market. Two main options are on the table: the ‘Iberian exception’ and the Greek non-paper (see EU Emergency Energy Meeting : A Never Ending Story, 31 August 2022). Earnings to watch Today’s key earnings release is NIO which one of the most prolific EV-makers in China. Revenue growth is expected to slow down to 16% y/y in Q2 as Covid restrictions slowed down consumer markets in Q2. Expectations are looking for revenue growth to accelerate to 66% y/y and a narrower EBITDA loss of CNY 1.7bn. Today: People’s Insurance Co Group, Exor, Copart, NIO Thursday: Sun Hung Kai Properties, Sekisui House, Zscaler, DocuSign Friday: Dollar Stores, Kroger Economic calendar highlights for today (times GMT) 0900 – UK Bank of England Governor Bailey and others testify before Parliament Poland Rate Announcement 1230 – US Jul. Trade Balance 1230 – Canada Jul. International Merchandise Trade 1300 – US Fed’s Barkin to speak 1400 – Bank of Canada Rate Decision 1400 – Canada Aug. Ivey PMI 1400 – US Fed’s Mester (Voter) to speak 1600 – EIA's Short-Term Energy Outlook 1640 – US Fed Vice Chair Brainard to speak 1800 – US Fed Beige Book 1800 – US Fed’s Barr (Voter) to speak on Financial System Fairness & Safety 2030 – API's (delayed) Weekly Report on US Oil Inventories 2301 – UK Aug. RICS House Price Balance 0130 – Australia Jul. Trade Balance 0305 – Australia RBA Governor Lowe to speak Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher       Source: Financial Markets Today: Quick Take – September 7, 2022 | Saxo Group (home.saxo)
Saxo Bank Podcast: The Upcoming Bank Of Japan Meeting, A Look At Crude Oil, Copper And More

The Japanese Yen Brought Closer To Its Worst Annual Performance Ever

InstaForex Analysis InstaForex Analysis 07.09.2022 11:26
The Japanese currency continues to depreciate against the US dollar. The closer the September meeting of the Federal Reserve, the worse the position of the yen becomes. Yesterday JPY set 2 anti-records at once. Historic fall The USD/JPY pair significantly accelerated its rise to the top on Tuesday. The quote soared by 0.6% and exceeded another 24-year high at around 143.28. What's more, yesterday's fall in the yen brought it closer to its worst annual performance ever. Since the beginning of the year, the yen has fallen against the dollar by almost 20%. This is more than in 1979, when the largest annual decline was recorded. Recall that this year the reason for the sharp weakening of the yen was the discrepancy in the monetary policy of Japan and the United States. At present, the Japanese central bank looks marginalized among its peers. While other central banks are raising interest rates to bring raging inflation under control, it has stubbornly kept the rate at extremely low levels. The Bank of Japan's dovish tactics are helping widen the gap between interest rates in Japan and the US, which is taking the most aggressive measures to combat inflation. In order to curb the rise in prices, this year the US central bank has already raised interest rates four times, twice by 75 bps. Now the market is evaluating the likelihood that in September the Fed will go for the third consecutive highest increase in the indicator, at 73%. Traders' confidence in the hawkish determination of US politicians is supported by optimistic US economic data. The index of business activity in the services sector for August was published on Tuesday. Last month, the indicator unexpectedly rose from the previous value of 56.7 to 56.9. This is much better than forecasts, as economists had expected to see the indicator drop to 55.1. Yesterday's statistics once again confirmed that the US economy, despite the rapid increase in rates, is still firmly on its feet. Therefore, at its next meeting, the Fed is likely to brush off the talk of a recession and follow the hawkish route at the same pace. This scenario puts an end to the yen. As the gap between Japanese and US interest rates widens, the JPY will continue to set anti-records. Where is the bottom? This morning the USD/JPY pair is still in a strong upward trend and is showing another achievement. The asset has broken through the level of 144. Analysts explain the current surge in quotes by a sharp increase in the yield of 10-year US Treasury bonds and a dovish statement by the BOJ. At the auctions in Tokyo, the yield of US Treasuries, inspired by positive US economic data, rose to its highest value since mid-June at 3.365%. Meanwhile, the yield on similar Japanese bonds approached 0.245%. This is very close to the upper end of the acceptable BOJ 0.25% trading range. Recall that earlier the Japanese central bank has repeatedly stated that it will not allow yields to rise above this value. Now, when the indicator is about to touch the key ceiling, the BOJ made another statement. On Wednesday, the BOJ announced that it is increasing planned purchases of Japanese government bonds as part of its regular open market operations from 500 billion yen to 550 billion yen. This decision greatly crippled the already weak Japanese currency and overshadowed its future prospects. The continuation of the USD/JPY pair rally is also evidenced by the technical picture. For now, the bulls are ignoring the overbought conditions of the RSI and are on their way to the rising resistance line since the end of April, which is in the 144.60 area. If bears continue to push to the upside of this level, the June and August 1998 peaks will be in focus. We are talking about the marks of 146.80 and 147.70 respectively.     Relevance up to 09:00 2022-09-12 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. Read more: https://www.instaforex.eu/forex_analysis/321027
Poland's Inflation Expected to Reach Single Digits in August, but Disinflation to Slow Down

Australia’s Economy, ECB Decision In Focus, The UK Has Problem With A Dockers

Saxo Bank Saxo Bank 08.09.2022 09:27
Summary:  The combination of a nearly 6% drop in crude oil price, a retracement of the dollar to close to parity with the Euro and a 8bp fall in the 10-yar treasury yields have jointly put together an environment for the stock market to rally and snap a 7-day losing streak since the Jackson Hole. The Bank of Canada raise its policy rate by 75bps, as expected. August trade data from China was much weaker than expectation with both exports and import falling. Excluding inflation, real export growth was estimated to be negative and crude oil import growth in volume terms was negative in August. The news contributed to the fall in crude oil price yesterday. What is happening in markets?   Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I)  The U.S. equity markets bounced off from the trough of the post-Jackson Hole decline and snapped a 7-day losing streak to finish Wednesday decisively higher, S&P500 +1.8%, Nasdaq 100 +2.1%.  The move higher was largely driven by a confluence of macro factors: lower bond yields, and announcing new products at the company’s annual event.  lower US dollar, and lower crude oil price plus short covering and call option delta hedging. With a 5.7% decline in crude price, the energy space was the only sector in the S&P 500 that fell. Twitter (TWTR:xnys) surged 6.6% following a Delaware court rejected Elon Musk’s request to delay a trial into the reclination of his offer to acquire Twitter. Snap (SNAP:xnys) jumped 6.4% after the Verge magazine cited an internal memo from CEO Spiegel stating the company’s goals to grow its user base by 30% and bring up revenue by 20% by the end of 2022. Apple (AAPL:xnas) gained 1.4% after a new line of products at its annual event. Apple did not raise prices for its new iPhone 14 series.  U.S. treasuries (TLT:xnas, IEF:xnas, SHY:xnas) Nick Timiraos at the Wall Street Journal (who is believed to be the Fed’s mouthpiece to guide market expectations) suggested that Fed Chair Powell’s “public pledge to reduce inflation even if it increases unemployment appears to have put the central bank on a path to raise interests by 0.75 percentage point rather than 0.50 point this month”. Fed Vice Chair Brainard pledged to fight against inflation “for as long as it takes” but also mentioned risks that might potentially be caused by over-tightening. The money market curve is pricing in a 78% chance a 75bp hike at the September FOMC. Treasury yields however fell across the curve as crude oil price went sharpy lower, 2-year yields -7bps, 10-year yield -8bps. Hong Kong’s Hang Seng (HSIU2) and China’s CSI300 (03188:xhkg) Hong Kong stocks notably underperformed their mainland counterparts second day in a row.  Hang Seng Index lost 0.8% and Hang Seng Tech Index dropped 1.3% while CSI300 was little changed. Heavyweight financial names HSBC (00005:xhkg) and AIA Group (01299:xhkg) tumbled about 2%.  The short video and live streaming names dragged on the China Internet space, Kuaishou (01024:xhkg) -3.7%, Bilibili (09626:xhkg) -4.2%.  U.S. House Representative Dusty Johnson (Republican, South Dakota) introduced the Block the Tok Act, a bill that would if enacted, prohibit Tik Tok from accessing U.S. citizen’s user data from within China and block Tik Tok’s apps on U.S. government devices.  Tencent (00700:xhkg) is increasing its stake in French video game developer Ubisoft (UBIP:xpar) but the latter’s founder retaining majority control.  Following President Xi Jinping stressing China’s determination to “mobilize resources nationwide to achieve breakthroughs in core technologies in key fields” in a high-level reform planning meeting on Tuesday, semiconductor leader SMIC (00981:xhkg) gained 1.2%. China developer Soho China (00410:xhkg) jumped 11% after Chairman Pan Shiyi and CEO Pan Zhangxin Marita resigned.  The Covid-19-related lockdowns, a weakening yuan, the disappointing August trade data from China, and the rise in U.S. interest rates continued to pressure the sentiment of the stock market.     USDJPY holding up despite softer yields USDJPY eased after hitting highs of 145, but still remained above 144 in early Asian hours on Thursday despite softer US yields overnight. The threat of intervention remains as Japan’s final Q2 GDP released this morning suggests markets may continue to test the Bank of Japan’s resolve to keep an accommodative policy. Q2 GDP was revised higher to 3.5% q/q annualized from 2.2% earlier. 10Y JGB yields are also at 2-month highs and in close sights of the 0.25% cap. Verbal intervention has had little effect, and real intervention will need a coordinated effort and will only increase the volatility as long as the US yields are on the rise. The only real scope of a yen recovery will be seen if US economic data starts to deteriorate or Bank of Japan tweaks policy. Crude oil prices (CLU2 & LCOV2) Oil prices steadied in the Asian morning after steep declines in the last few days amid demand concerns especially with China pushing further with its zero Covid policy. Chengdu extended a lockdown in most of its downturn areas, raising concerns the restrictions will hurt oil consumption. A stronger dollar, despite softer yields, also weighed on investor appetite. Supply issues made little impact, even as EIA lowered its annual oil production targets, with domestic production now expected to reach 12.6mb/d, and raised its demand outlook, with annual petroleum usage rising 2mb/d through next year. The likelihood of an Iran nuclear deal in the near term is also fading. What to consider? Fed speakers, and another possible WSJ leak? Federal Reserve Vice Chair Brainard noted rates will need to rise further and policy will need to be restrictive for some time. She needs to see several months of low inflation readings to be confident inflation is moving down to 2% but how long it takes to get back to target will depend on a combination of continued easing in supply constraints, slower demand growth, and lower markups, against the backdrop of anchored expectations. Mester (2022 voter) reaffirmed that she is not yet convinced about inflation peaking yet, and she also spoke on the August jobs report, where she said they are beginning to see some moderations but labour market conditions remain strong. Besides, WSJ's Nic Timiraos wrote: "The Federal Reserve appears to be on a path to raise interest rates by another 0.75 percentage point this month in the wake of Chairman Jerome Powell’s public pledge to reduce inflation even if it increases unemployment." While the Fed is not yet in a blackout period, with Chair Powell set to be on the wires later today, there is little chance this could be a leak like last time. Still, money market pricing of a 75bps rate hike at the September meeting has picked up from 68% on Tuesday to 81% now. China’s exports in August slowed In U.S. dollar terms, China’s exports in August come in much weaker at +7.1% YoY (Bloomberg consensus: +13% YoY; July: +18.0% YoY).  Once adjusting the data with export price inflation, the real growth of exports may have turned negative in August YoY.  Export growth decelerated across destinations, except Russia (having risen to 26.4% YoY in August from 21.4% in July).   The growth of export to the U.S. was particularly weak, having turned to minus 4.2% YoY in August from a growth of 10.9% in July.  Imports growth was also slower than expected, coming in at +0.3% YoY (Bloomberg consensus +1.1% YoY; July: +2.3%). The weakness in import growth tends to indicate weak domestic demand.  The growth of imports from the U.S. slowed to -7.5% YoY in August from -4.3% YoY in July. Import volume growth for crude oil was negative at -9.4% YoY in August, little changed from -9.5% in July but import volume of coal bounced to a growth of 5.0% YoY in August from -22.1% in July. Import volume of iron ore declined to -1.3% YoY in August from a growth 3.1% in July.  The import volume of copper, however, increased to +26.4% YoY in August from 9.3% in July.     Australia’s economy grew stronger than expected YoY vindicating more rapid hikes are coming Australia’s A$2.2 trillion economy grew at 0.9% q/q in the second quarter (beating Bloomberg estimates), while growing 3.6% y/y also beating the 3.4% expected. Australia’s economic firepower came from record high commodity exports, with exports now accounting for 1% of GPD YoY. The data also showed the economy strengthened by a boost in retail sales with department store sales at record pace. Services and economic earnings were also able to offset the pull back in savings rates, which fell for the third straight quarter to 8.7%, as households are having to dive into their bank accounts to pay record high energy prices. AUDUSD vulnerable of another pull back The USD against the Aussie popped to its highest level since June 2020, after a Wall Street Journal article suggested Fed Chair Powell is committed to reducing inflation with a 0.75% hike likely in September. What also supports this is that stronger than expected US economic data continues to come through (with the most recent data showing the US services sector is healthy), validating the Fed has room to rise rates. Basically, the market is thinking the Fed has room to be more aggressive, while the RBA’s hikes are more subdued. Bottom line, you can’t fight the Fed. The technical indicators suggest the AUDUSD could also retest its lows, while the USDAUD could touch its April 2020 high. Australia assures its Asian customers it will remain a reliable LNG supplier; but it won’t guarantee anything Australia’s Minister for resources has again been called on to ‘pull the trigger’ and limit gas exports given the projections show Australia will have an energy shortage next year. The Minster said although it has the matter under control, it cannot guarantee it won’t be limiting exports. Japan imported A$17 billion of the fossil fuel from Australia last year. As such Japan says it’s watching the situation closely. Bank of Canada raised rates As expected, Bank of Canada hiked rates by 75bps bringing the rate to 3.25% into restrictive territory, given the central bank’s estimate of neutral rate is 2-3%. The tone remained hawkish, but lacked clear guidance as it reiterated that further hikes will be necessary to bring inflation to target, implying the BoC is not done yet and will move even further into restrictive territory. While growth is slowing and housing prices are down 18% since February, but short-term inflation expectations remain high, signalling a risk that elevated inflation becomes entrenched. NIO earnings Chinese EV maker NIO (NIO:xnys/09866:xhkg) reported better-than-expected revenue of RMB 9.57 billion due to pent-up demand. The company delivered 25,059 vehicles in Q2, a 14.4% growth from last year. Gross margins, however, decreased to 16.7% from 18.1% in Q1 this year and 20.3% in Q2 last year. Management’s guidance for Q3 delivery was 31,000 to 33,000 vehicles, below analyst expectations.  ECB rate hike in focus; what could it mean for EURUSD? The European Central Bank meeting will be in focus after plenty of chatter around front-loading rate hikes in the last few days. Most members have come out in support of a 75 basis point rate hike for the September, and the market pricing suggests 125 basis points between September and October meetings (so one 75bps and one 50bps). Only Philip Lane seemed to strike a different tone, saying that he would prefer step-by-step hikes to make sure the financial markets have time to absorb the tightening in a measured manner. August inflation for the Euro area, reported last week, also suggested further price pressures with a 9.1% YoY print from 8.9% YoY previously. Market pricing suggests a 67bps rate hike today, and a cumulative hike of 129bps by October or 157bps by year-end. With a 75bps rate hike not fully priced in for September, such a move along with commitment to do more front-loading could be positive for EURUSD in a knee-jerk. Still, with energy crisis in focus and EU emergency meeting scheduled for tomorrow, it may remain hard for EURUSD to stay above parity. Only a 100bps rate hike will really count as a hawkish surprise. If ECB decides to go for 50bps, we could see EURUSD test the cycle lows. New dockers strike in the United Kingdom (UK) The UK has been facing recurring transport disruptions over the past few years. This is related to Brexit, Covid and now higher cost of living. A dockers strike at Felixstowe port (the country’s first container port) ended a few days ago. But a new one is looming at the port of Liverpool. The dockers trade union is calling for a strike from 19 September to 3 October (at least) after negotiations to raise salary failed. This matters a lot. The port of Liverpool is a key hub for transatlantic sea transport. If inflation continues to rise (which is likely), expect much more strikes to come and not only in the transport industry. Social tensions will probably increase sharply in the coming months.   For a week-ahead look at markets – tune into our Saxo Spotlight. For a global look at markets – tune into our Podcast.   Source: APAC Daily Digest: What is happening in markets and what to consider next – September 8, 2022 | Saxo Group (home.saxo)
Rising U.S. Treasury Bond Yields Have Helped The USD/JPY Bulls

Japanese Yen (JPY) Could Go Even Lower As The Monetary Policies Of Fed And Bank Of Japan Are Totally Dissimilar

Kenny Fisher Kenny Fisher 08.09.2022 16:29
The Japanese yen remains under pressure. In the North American session, USD/JPY is trading at 143.96, up 0.14%. The yen came within a whisker of the 145 line on Wednesday, touching 144.99. Japan sounds alarm as yen slips The yen continues its nasty slide. USD/JPY has jumped about 8% since August 1st, and continues to record new 24-year highs. It’s not just that the yen is trading close to 145, but the speed at which the Japanese currency is depreciating. USD/JPY broke above the 140 line on September 1st and the dollar onslaught has continued without letup. The yen’s most recent fall has, predictably, resulted in Japanese officials sounding the alarm. Masato Kanda, Japan’s top currency official, said today that the government and the BoJ were “extremely worried” about the recent yen moves, and are watching the currency markets with a strong sense of urgency. Kanda added that “the government is ready to take action in the currency market”, but his remarks have done nothing to stop the yen’s downswing. Investors have heard this rhetoric time and time again, without any action from Tokyo. The last time Japan intervened in the currency markets to prop up the yen was in 2011, and the BoJ is committed to an ultra-loose policy to support growth, and Governor Kuroda has ruled out tightening policy until inflation remains sustainably above 2%, along with higher wage growth. Inflation is running close to 3%, but this is mainly due to higher import costs, which the BoJ considers a temporary cause of rising inflation. With the government unlikely to intervene and the BoJ suppressing any rate increases, the yen is at the mercy of the US/Japan rate differential, which has been moving higher. With the Fed expected to remain aggressive, the yen is likely to continue heading lower. USD/JPY Technical There is support at 142.75 and 141.48 USD/JPY is testing resistance at 143.81. Above, there is resistance at 144.70, which was tested on Wednesday This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Analysis Of The EUR/JPY Pair Movement

Geopolitical Events And Macro Data Strongly Affect Currency Pairs

Saxo Bank Saxo Bank 09.09.2022 13:58
Summary:  A sharp US dollar sell-off has developed, one that materialized suddenly overnight and was extended by comments from Bank of Japan Governor Kuroda that inspired a steep plunge in USDJPY after its recent aggravated extension higher. The ECB meeting yesterday brought more hawkish than expected guidance, theoretically helping the EURUSD back-up well above parity, though the timing of the bulk of the rally in Asian hours offers cause for head-scratching. FX Trading focus: What is the quality of this USD sell-off…and JPY rally? The USD move overnight looked suspicious as it came just after midnight GMT – perhaps led by a run on stop orders above yesterday’s post-ECB meeting high around 1.0030? Hmm – the move was broad-based, so not entirely convinced. China set its yuan reference rate sharply higher than expected about an hour later, and then the BoJ Kuroda comments discussed below came on board. The move in EURUSD happening in Asian hours rather in the context of the ECB meeting having already sharply boosted EU yields earlier in the day yesterday has me scratching my head and wondering at the quality of this USD move lower – and wanting to reserve judgment on what is going on here at least until the end of today’s/this week’s action and possibly until we see how the market treats the EU’s power price cap plan after the summit on the matter in Brussels today and then next Tuesday’s US August CPI release. It is no major surprise that some stern words from Bank of Japan Governor Kuroda were able to inspire a sharp consolidation lower in USDJPY after its wild extension higher recently that seemed a bit excessive relative to the support from coincident fundamental indicators like global long sovereign yields/spreads. After meeting Prime Minister Kishida overnight, Kuroda said that “sudden moves in foreign exchange rates increase uncertainty for firms and are undesirable.” And “ a two to three yen move against the dollar in a single day is very sudden.” A couple of figures on a comment are easy, more would require a more notable retreat in global yields and commodity prices and perhaps real intervention. By the way, an FT article with the provocative title “Can Japan feed itself” makes clear that food prices have been capped by the Japanese supermarket industry for some time now at the retail level and are set for a significant reset on October 1. This will mean a leap in the official CPI numbers from the month of October. At the same time, PM Kishida is readying a new raft of packages aimed at supporting lower income households cost-of-living challenges. There is a chicken and egg problem here with price controls and preventing cost-of-living increases on the one hand and the Bank of Japan theoretically waiting for the Godot of wages beginning to rise to signal that inflation is becoming more embedded. With cost-of-living support, the wage earner is less likely to demand a raise…. Something is going to have to give, but it’s hard to believe that a stern few phrases from Kuroda will do the trick, although this could be the beginning of a far more choppy JPY trajectory from here, as from these levels or lower in the JPY, the Ministry of Finance may be willing to throw billions of intervention into the mix in an attempt to halt further JPY declines. Chart: USDJPYBoJ comments overnight have triggered a significant slide in USDJPY, if one not yet as large as the two-day rallythat sent the pair soaring all the way to the cusp of 145.00 two days ago. A retreat and close anywhere close to 140.00 today would create an interesting shooting star formation for the weekly candlestick, although really the pair needs to wipe out a great proportion of the move from the pivot low in early August at 130.40 to suggest a more profound reversal is afoot here. Meanwhile, a close today in the 142-143 range suggests that little harm has been done, even tactically, to the USDJPY up-trend. The ECB meeting brought far firmer guidance from the central bank than expected, as German 2-year yields traded some 30 basis points higher today relative to the close the day before the meeting – to a new cycle high north of 1.40% before that move faded sharply today back toward 1.30%. The 75-basis point hike was the largest in the ECB’s history and is expected to be repeated at the late October meeting after the guidance that another move of that size can’t be ruled out in yesterday’s presser. But Europe needs sustained relief on the energy/power price front for a more sustainable rally. Curiously, the market waking up to EURUSD trading well north of parity this morning had nothing to do timing-wise with the ECB as it unfolded overnight. Yesterday, the market seemed unsure with what to do with the euro in the immediate aftermath of the decision and guidance. For EURUSD, a close above 1.0100, which was teased today, is needed to set the focus toward the next area into 1.0350, while a close back below parity today would suggest that the overnight pump was merely linked to poor liquidity, order flow and the Bank of Japan verbal intervention mentioned above. An election is set this weekend for Sweden, with the currency market not particularly holding its breath in anticipation. EURSEK has corrected sharply lower in fitting with the strong risk sentiment of the moment, but has a lot of work to do to set the focus back lower, at least a move below 10.50. As I am writing this, the Bank of England has announced that it is moving back its next meeting from next week to the following week, likely due to Queen Elizabeth’s death and the mourning period, but this will give the Bank the luxury of having a look at the FOMC meeting the day before and whether it needs to stiffen its message or even hike more than it anticipated if sterling is struggling to new lows going into the meeting. Table: FX Board of G10 and CNH trend evolution and strength.The USD momentum has shifted sharply lower over the last couple of days, but reserving judgment at least until the daily/weekly close today. Elsewhere, look at CHF continuing to power on despite the ECB hawkish guidance yesterday. Table: FX Board Trend Scoreboard for individual pairs.It’s looking like cross-over day again for EURCHF after the ECB failed to sustain the recent rally despite the mark-up of EU yields. USDCHF has also rolled over and is threatening a turn lower, although looking at the chart, there is a lot of choppy range to work with yet. Upcoming Economic Calendar Highlights 1230 – Canada Aug. Net Change in Employment / Unemployment Rate 1600 – US Fed’s Waller (Voter) to speak 1600 – US Fed’s George (Voter) to speak   Source: https://www.home.saxo/content/articles/forex/fx-update-usd-weakens-broadly-but-are-the-drivers-sustainable-09092022
Asia morning bites - 16.05.2023

If The Currency "Power Ranking" Was Turned Upside Down, The (JPY) Yen Would Be Leading The Pack

Conotoxia Comments Conotoxia Comments 09.09.2022 17:52
The Japanese currency against the US dollar is the weakest of the main world currencies in 2022, having lost more than 20% in the last 12 months. As a result of such a strong drop, the USD/JPY pair's quotations have reached their highest level since 1998. This year, the yen intervention took place, which the market may again fear. The severity of the yen's drop may have been due to divergence in the Bank of Japan's monetary policy toward the world's other main central banks. The Fed raises interest rates, the ECB does, and the Bank of England or the Bank of Australia also raise interest rates. Meanwhile, the Bank of Japan continues to loosen monetary policy and keep market interest rates close to zero, also applying yield curve control. Nevertheless, the recent slump in the Japanese currency may have started to cause concern among Japanese policymakers and decision-makers. Source: Conotoxia MT5, USD/JPY, MN Japanese authorities are concerned about JPY weakness Japan's Vice Minister of Finance for International Affairs Masato Kanda said on Thursday that the government is "extremely concerned" about the yen after it weakened to levels seen 24 years ago. Kanda pointed out the recent "speculative, one-sided sharp movements of the yen", reasoning that the currency's decline cannot be explained simply by looking at the fundamentals and describing it as "excessive volatility". He assured that the government was coordinating actions with other countries, including the United States, adding that the government was ready to act on the currency market and was not ruling out any course of action, as reported by BBN/DJ. In addition, there has already been a meeting between Bank of Japan Governor Haruhiko Kuroda and Prime Minister Fumio Kishida, which may also have raised concerns among foreign investors. Technical situation - USD/JPY From a charting point of view, the USD/JPY pair's price has reached a potential resistance defined by the line drawn after the previous peaks in recent days. This line and the line drawn after the lows could form a possible expanding wedge formation. In the shorter term, this potential support could be located at the trendline and at the equilibrium of corrective movements, which at the moment falls in the vicinity of 141.10 JPY. Source: Conotoxia MT5, USD/JPY, D1 What is being said about the yen? In a statement to Bloomberg, the head of the currency strategy at Nomura Securities Co. in Tokyo said that there had been a three-way discussion between the BOJ, the Ministry of Finance and the Financial Services Agency and that this has a significant psychological impact on the market participants. Yujiro Goto also added that it also has something to do with the fact that if there was any plan to intervene, the government would coordinate with the BOJ. Goto pointed out that the risk of intervention and a change in BOJ policy or guidance this month has increased compared to a few weeks ago. In the summary of the Nomura Securities Co. representative statement, it was noted that some orders that accompanied bets on the USD/JPY above 145 could also be triggered.   Daniel Kostecki, Director of the Polish branch of Conotoxia Ltd. (Conotoxia investment service) Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 82.59% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Source: Fears of intervention targeting the Japanese yen (conotoxia.com)
The Commodities Feed: China's 2023 growth target underwhelms markets

Power Producers Need To Buy Carbon Permits, In China Loans To Households Remained Sluggish

Saxo Bank Saxo Bank 12.09.2022 10:01
Summary:  Ukrainian success in taking back significant territory from Russia over the weekend has driven a cautious further recovery in the euro and sterling at the open of trade this week. Elsewhere, yields have jumped higher, helping drive new yen weakness and taming risk sentiment as the US 10-year treasury benchmark trades near the cycle highs since June. Focus this week is on tomorrow's US August CPI release, the most important data point ahead of next week’s FOMC meeting.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) US equities Friday on a strong note up 1.5% and S&P 500 futures have extended their gains overnight touching the 4,100 level because before receding to around the 4,085 level in early European trading hours. The US 10-year yield continues to move higher trading at 3.34% and if it sets a new high for the recent cycle it will probably cause headwinds for US equities so watch the US bond market. Next big macro event is tomorrow’s US August CPI report which is expected to print –0.1% m/m suggesting inflation is beginning to cool. Hong Kong’s Hang Seng (HSIU2) and China’s CSI300 (03188:xhkg) Hong Kong, Shanghai, and Shenzhen are closed today for the mid-autumn festival holiday. Last Friday, Hang Seng Index soared 2.7%, snapping a six-day losing streak following China’s August inflation data surprising to the downside and raising hope for more monetary easing to come from the Chinese policymakers. Chinese property names rallied on market chatters about unconfirmed stimulus measures from policymakers to boost the ailing property sector. Ahead of the mid-autumn festival, catering stocks gained. CSI 300 climbed 1.4%, led by property, dental services, infrastructure, and digital currency.  Northbound inflows into A-shares reached USD2.1billion equivalent last Friday, the largest inflow in a single day since the beginning of the year. Ukrainian success on the battlefield drives EUR and GBP strength The surprise offensive and the re-capture of a key transport hub in the northeastern sector of the front after recent focus on operations in the south caught the market by surprise and has seen the euro and sterling rebounding versus the US dollar in early trading this week, with EURUSD trading to new local highs well clear of 1.0100 briefly overnight before edging back lower. Likewise, GBPUSD pulled north of 1.1650 before treading water back toward 1.1600. It will take some time and further developments to assess whether Ukraine can capitalize on its gains and this in turn triggers a new stance from Russia on its energy policy. JPY crosses back higher as yields rise The USDJPY correction on Friday inspired by somewhat stern language from Bank of Japan Governor Kuroda has mostly faded, as USDJPY bobs back above 143.00 overnight on US treasury yields challenging cycle highs. EURJPY pulled back close to the cycle high well above 144.00 overnight on hopes that the war in Ukraine is turning in the Ukrainians favour. New highs in USDJPY may bring more two-way volatility again if Japanese officialdom backs up its concern on the situation with market intervention (buying JPY). Crude oil (CLV2 & LCOX2) Crude oil starts the week in defensive mode with the focus staying with demand concerns amid continued lockdowns in China hurting demand from the world's top importer and a rapid succession of interest rates from major central banks negatively impacting the global economic outlook. Into the mix a US-backed plan to cap prices on Russian oil sales from December 5, a stranded Iran nuclear deal, strong demand for fuel products such as diesel at the expense of punitively high gas prices and a softer dollar. In addition, the collapse of Russian defenses in Ukraine and the response from Moscow will be watched closely. Monthly oil market reports from OPEC tomorrow and IEA on Wednesday should provide some further guidance on the supply/demand outlook. Brent’s current range: $92.75 and $87.25 US Treasuries (TLT, IEF) The 10-year US Treasury benchmark edged higher toward the local range high north of 3.3% overnight, with only the June peak at 3.50% remaining as the focus to the upside (this was the highest yield for the cycle since early 2011 and the run higher in yields in June coincided with the major low of the equity bear market this year. Tomorrow’s US August CPI number is the next key test for sentiment and yield direction, while the US Treasury will also auction both 3-year and 10-year treasury notes today and will auction 30-year t-bonds tomorrow. What is going on? France’s manufacturing production contracted in July According to the latest estimate released by the French Institute of National Statistics (INSEE), the manufacturing production decreased by a stunning 1.6 % month-over-month in July. It remains in expansion on a yearly basis (+0.2 %). Without much surprise, the drop is mostly explained by higher prices, especially higher energy prices. The INSEE does not forecast a recession in France this year. Nonetheless, growth is likely to decelerate very sharply in the coming quarters. The institute forecasts that growth will be around 0.2 % in Q3 and will be stagnant in Q4 2022. India’s rice export ban risk aggravating global food crisis After a ban on wheat exports earlier this year, India has now announced restrictions on rice exports, aggravating concerns of a global food crisis. Bloomberg reported India imposed a 20% duty on white and brown rice exports and banned shipments of broke rice. The new curbs apply to about 60% of India's rice exports and go into effect Friday. India’s rice output has been depressed due to the severe heatwaves, but also possibly to cap domestic price pressures. If these measures are duplicated by other key rice exporting countries like Thailand and Vietnam, there could potentially be a severe grain shortage globally, especially weighing on poor rice importing nations. We continue to see a threat of climate change to global agricultural output, which along with a prolonged energy crisis, suggested price pressure will stay in the medium-to-long term despite some cooling off from the recent highs. European carbon price drops as EU considers sale of permits from reserves The December ECX emissions contract (EMISSIONSDEC22) has fallen by around one-third since hitting a record high last month above €99 per tons. Given the current energy crisis, EU energy ministers are moving towards a deal to sell surplus permits from its Market Stability Reserve (MSR) in order to support a reduction in the cost of producing power and heating within the region. Power producers need to buy carbon permits to offset the polluting impact of using coal and gas over renewables. Occidental Petroleum shares rise on Berkshire accumulation In a filing on Friday, Berkshire Hathaway announced that it has lifted its stake to 26.8% in Occidental Petroleum. The move comes after the investment firm got regulatory approval for increasing the stake to over 50%. Berkshire’s move in Occidental Petroleum shares is seen as a move of confidence in the oil and gas industry as a much-needed industry for bridging the gap during the green transformation. Semiconductors are in focus as the US is expected to announce more curbs on exports The US Commerce Department is expected to publish new regulations curbing exports of semiconductors to China with companies such as KLA, Lam Research, and Applied Materials likely being impacted by the upcoming regulation. The move by the US further confirms the deglobalisation under the rule of self-reliance applied by increasingly more countries. China’s medium to long-term corporate loans picked up in growth  Over the past months, Chinese policymakers instructed policy banks and gave window guidance to commercial banks to extend credits to support infrastructure construction and key industries of the economy. Some results showed up in the August loan data which recorded a growth of 16% m/m annualized in the outstanding medium to long-term loans to the corporate sector. The amount of new medium to long-term loans to corporate was RMB 735bn in August versus RMB 346bn in July and RMB 522bn in August 2021. Loans to households remained sluggish. PBoC issues a list of 19 systemically important banks The People’s Bank of China and the China Banking and Insurance Regulatory Commission issued a list of 19 systematically important banks.  These 19 banks will face between 0.25% and 1% higher minimum capital requirements and additional leverage requirements. They are also asked to prepare contingency plans for major risk events. These 19 banks are Industrial and Commercial Bank of China, Bank of China, China Construction Bank, Agricultural Bank of China, China Minsheng Bank, China Everbright Bank, Ping An Bank, Hua Xia Bank, Ningbo Bank, China Guangfa Bank, Jiangsu Bank, Bank of Shanghai, Bank of Beijing; China CITIC Bank, China Postal Savings Bank, Shanghai Pudong Development Bank, Bank of Communications, China Merchants Bank, and Industrial Bank. The CPC is set to amend the party constitution at its upcoming national congress The Political Bureau of CPC Central Committee said in a readout last Friday that the Communist Party of China (CPC) is set to “work out an amendment to the Party Constitution that facilitates the innovative development of Party theories and practices and meets the need of advancing the great new project of Party building in the new era” at the CCP’s national congress to convene starting on October 16.  It further elaborates that “the latest adaption of Marxism to China's context and new circumstances will be fully epitomized and so will the new ideas, new thinking and new strategies of governance developed by the CPC Central Committee since the Party's 19th National Congress in 2017. What are we watching next? The Bank of England (BoE) will need to go big on 22 September The meeting initially scheduled for this week is postponed following the Queen Elizabeth II. Last week, both the Bank of Canada and the European Central Bank hiked their benchmark interest rate by 75 basis points. All eyes are turning to the BoE now. Pressure is mounting for the BoE to go big this week – meaning a 75-basis points hike. In August, the central bank hiked rates by 50 basis points to 1.75 %. Despite prime minister Liz Truss’s new anti-inflation plan (which will likely lower the peak in inflation), we think the BoE will need to show its commitment to fight inflation. The Bank forecasts that UK CPI will increase to 13.3 % year-over-year in Q4 2022. But the peak in inflation is only expected in 2023. This means that the cost of living will continue increasing in the short term, anyhow. Fed speakers stay hawkish before the blackout period begins and ahead of US CPI release tomorrow Fed rate hike expectations have picked up strongly since Jackson Hole, and we have heard an extremely unanimous voice from the Fed speakers since then. Some of them have clearly made the case for a 75bps rate hike in September, with Bullard on Friday even saying that Tuesday’s CPI report is unlikely to alter the incoming 75bps rate hike in September. Governor Waller leaned hawkish as well, but did not specify the size for September’s decision, but a “significant” hike still points to that. Esther George stayed away from guiding for individual meetings but made the case for sustained rate hikes. Ethereum merge The second-largest cryptocurrency, Ethereum, is scheduled to undergo a major upgrade this week (estimated on Thursday) which, if successful, will fundamentally change the way the cryptocurrency is working. It will go from the computationally intensive proof-of-work consensus to the more energy-friendly proof-of-stake, as well as introducing a mechanism to limit the inflation in Ethereum. The crypto community is looking very much forward to this upgrade, although some are concerned about the security in the new framework. Earnings to watch Today’s key earnings release is Oracle which a better-than-expected earnings result on 13 June surprising the market on EPS by 12% as the legacy database and software maker is gaining momentum in its cloud offering. Analysts expect FY23 Q3 (ending 31 August) revenue growth to accelerate to 18% y/y, which includes its recent acquisition of Cerner in the health care sector, which is impressive for the previously low growth company despite some of the growth being driven by acquisitions. If the outlook remains strong a longer-term repricing of the company’s valuation could be in the making. Today: Oracle Tuesday: DiDi Global Wednesday: Inditex Thursday: Polestar Automotive, Adobe Economic calendar highlights for today (times GMT) 0730 – ECB's Guindos to speak 0800 – Switzerland Weekly SNB Sight Deposits 1200 – ECB’s Schnabel to speak 1530 – US 3-year Treasury auction 1700 – US 10-year Treasury auction 2100 – New Zealand Aug. REINZ House Sales 0030 – Australia Sep. Westpac Consumer Confidence 0130 – Australia Aug. NAB Business Conditions/Confidence Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean engraver Source: https://www.home.saxo/content/articles/macro/market-quick-take-sep-12-2022-12092022
Hawkish Fed Minutes Spark US Market Decline to One-Month Lows on August 17, 2023

Expectations Of Fed Actions And Their Impact On The Currency Market

InstaForex Analysis InstaForex Analysis 12.09.2022 10:59
World markets closed higher last week, indicating that sellers are inactive ahead of incoming US news and Fed meeting next week. The main reason was the ECB meeting, at which the key interest rate was raised by 0.75% to 1.25%. Another factor could be the statements of both Christine Lagarde and Jerome Powell, which once again hinted that central banks would act aggressively when raising rates. However, some believe that the Fed will not be able to withstand pressure, so they will take a pause in rate increases. They said the central bank will act only when consumer inflation in the US slows down. Forecasts already say CPI is likely to decline from 8.5% to 8.1% y/y, then from 0% to -0.1% m/m. If the data comes out lower than expected, the Fed will raise rates by only 0.25% in October. In this case, a slowdown in the sale of government bonds and a continuation of the weakening of dollar can be expected. Also, the rally in stocks that began last week may continue, which will spur the growth of risky assets, including euro. Forecasts for today: EUR/USD The pair is trading below 1.0110. Overcoming this mark may push the quote towards 1.0200. USD/JPY The pair is rising, thanks to positive market sentiment. This may lead to a further increasefrom 143.65 to 145.00.   Relevance up to 08:00 2022-09-14 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/321372
Russia's Weekend Mutiny Raises Concerns About Putin's Power Grip; Market Highlights: Gold Support, FX Intervention, and Fed's Stress Test Results

The US Dollar Keeps Growing And Is It Thanks To Fed's Policy?

InstaForex Analysis InstaForex Analysis 12.09.2022 11:17
Former US Treasury Secretary Lawrence Summers said dollar has more room to grow given a number of fundamentals behind it. He expressed skepticism over the effectiveness of any intervention to turn the tide for yen. In a statement, Summers stressed that the US has a huge advantage in not being dependent on "outrageously expensive foreign energy." He noted that Washington has taken a stronger macroeconomic response to the pandemic, and that the Federal Reserve is now tightening monetary policy faster than its counterparts. So far, the Bloomberg Dollar Spot Index is up about 11% year-to-date, hitting a record high this week. Dollar reached its highest level against euro since 2002 on Tuesday - 0.9864, while it reached the highest level since 1998 against yen on Wednesday - 144.99. Yen has depreciated faster than euro, causing a more-than-19% fall against dollar this year. This prompted increased warnings from Japanese officials, with Bank of Japan Governor Haruhiko Kuroda meeting with Prime Minister Fumio Kishida to discuss latest concerns on Friday. Japanese officials are not ruling out options as market participants discuss the chances of intervention to buy yen and sell dollars. Japan hasn't done this since 1998, when it teamed up with the US - while Summers was deputy treasury secretary - to help stem the yen's fall. For its part, the US Treasury Department insisted on its unwillingness to support any potential intervention in the forex market to stop the depreciation of yen. Summers stressed that the more fundamental issue for yen is the interest rate adjustments in Japan, both short-term and long-term. The Bank of Japan maintained a negative short-term interest rate, as well as a 0.25% yield cap on 10-year bonds.  Go to dashboard       Relevance up to 14:00 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/321348
The EUR/USD Pair Is Showing A Potential For Bearish Drop

JPY (Japanese Yen) Is Going Down Lacking Actual Support From Governors. Bitcoin Price Leave Investors With Mixed Feelings

Craig Erlam Craig Erlam 12.09.2022 15:19
European stocks are off to a positive start on Monday, following a relatively muted day in Asia amid bank holiday closures in China, Hong Kong and South Korea. UK growth continues to struggle The UK economy grew slightly less than expected in July, with growth supported by consumer-facing services on the back of the Women’s EUROs and the Commonwealth Games. With the additional bank holiday this month, the economy could be facing a small technical recession, albeit one that won’t be nearly as bad as was expected prior to the cap on energy bills. There’s a lot more data to come this week which should show consumer spending slipping as inflation remains above 10% and the labour market still strong. Yen slips once more The Japanese yen is slipping again at the start of the week despite continuous warnings from officials about the movements in the currency. While they continue to stress the urgency with which they view the unjustified moves, they’ve so far shown themselves to be all talk and no action so the warnings are increasingly falling on deaf ears. US inflation data eyed on Tuesday There’ll be a heavy focus on the US this week as traders await CPI data on Tuesday. The release comes following another flurry of hawkish Fed speak. It seems policymakers were keen to reinforce their hawkish position ahead of the blackout period – which we’re now in – potentially with an eye on that data point. They’ll have no opportunity to react to the release ahead of the meeting and there was perhaps a feeling that a softer reading could see market expectations slip which they clearly want to avoid. It will be interesting to see how traders now respond as we’ve seen how keen they are to hop aboard the “dovish pivot” train before. Bitcoin enjoying a strong rebound The recovery in bitcoin since the end of last week has been very strong, with the rally topping 4% again today. Whether it’s the expectation of a dovish shift, a weaker dollar or just an improvement in broader risk appetite, something is giving cryptos a big boost and that’s helped bitcoin hit its highest level since it went into freefall on 19 August. Things may be looking up in the short term, although once more, that may well depend on the inflation data. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Risk rebound continues - MarketPulseMarketPulse
USD/JPY - Why Did Japanese Yen Gain? Euro (EUR) And US30 Go Up

USD/JPY - Why Did Japanese Yen Gain? Euro (EUR) And US30 Go Up

Jing Ren Jing Ren 13.09.2022 08:22
USDJPY consolidates gains The Japanese yen bounced after the government hinted at intervention to support its currency. The dollar gained momentum after it cleared the previous top at 139.30. However, it soon came under pressure at the psychological level of 145.00 and may take a breather. After the RSI soared into overbought territory, a drop below 143.00 led to a round of profit-taking with 141.50 as an intermediate support. Further down, 139.10 is a major level from a bullish breakout and sits on the 20-day moving average, making it an area of interest. EURGBP attempts to break out The euro strengthens as the ECB would reportedly accelerate its rate hikes to bring down inflation. The pair is at a crossroads under June’s high at 0.8720. A combination of profit-taking and fresh selling could weigh on the price action after a fall below 0.8660. The area between 0.8620 and 0.8570 next to the 20-day moving average is a major level to test the bulls’ resolve. A series of higher lows indicates a build-up in buying pressure and a breakout could let off steam and trigger a full-fledged rally towards 0.8900. US 30 grinds towards key resistance The Dow Jones 30 rallies ahead of a new set of US inflation data. The current recovery has gained traction once above 32000, sending the index towards the key supply zone around 33300 at the origin of a sharp sell-off back in late August. Strong selling pressure could be expected from trend followers as the market mood remains fragile. The RSI’s repeated overbought condition may limit the upside range in the resistance area. 32150 is the closest support and a bullish breakout would lift offers to the previous peak at 34300.
The USD/JPY Price Seems To Be Optimistic

The Downward Trend Of The Yen Will Continue

InstaForex Analysis InstaForex Analysis 13.09.2022 12:16
The Japanese yen has been trying to strengthen against the greenback for the second day in a row, but the latter is holding firm. Whose one will take in the end? According to experts, the JPY will win the current battle, but the USD will win the war. Yen getting ready for a jump Yesterday, the US dollar continued its corrective pullback from the 20-year high reached last week. This served as a strong headwind for the USD/JPY pair. At the beginning of Monday, the asset showed a steady growth, but could not stay above the level of 143 and ended the day lower. Pressure on the greenback came from expectations of the release of statistics on inflation in the US last month. The report will be published today. Economists predict another weakening of inflationary pressure in annual terms. According to them, the consumer price index will drop to 8.1% in August, after falling to 8.5% in July. Traders fear that a sustained weakening of inflation will change the Federal Reserve's rhetoric on interest rates. Recall that the US central bank is preparing to announce a rate hike at its September meeting, which will be held on September 20-21. Markets are currently evaluating an 85% likelihood of a 75 bps increase. However, a strong fall in inflation could significantly dampen hawkish expectations. Against this background, the dollar is in danger of plunging, especially when paired with the yen. Now the USD/JPY bears are just waiting for the moment when there is even the slightest hint of a slowdown in the growth of the gap in US and Japanese interest rates. Nevertheless, analysts warn that the rise in the yen will be short-lived. After the release of statistics on inflation in the US, the yen can only get a short-term growth momentum. In the future, the JPY will continue to fall against the US dollar. And there are two good reasons for this. Reason #1: One-sided intervention will not work After the yen plunged sharply against the dollar last week and nearly touched a critical 145, the Japanese government sharply tightened its intervention warning. Several high-ranking officials immediately stated emphatically that the action plan to support the yen is already on the table. Market confidence that the Japanese authorities may soon move from words to deeds, has grown after Friday's meeting between Bank of Japan Governor Haruhiko Kuroda and Prime Minister Fumio Kishida. Both expressed great concern about the rapid fall of the national currency. Officials' comments helped the yen to stabilize slightly, but it is still well above the levels at which Japan has previously interfered in the market. Analysts believe that now the red line for the Japanese authorities is the level of 145. As soon as the yen tests this mark, the intervention will not be long in coming. Some experts have no doubt that Japan will take this step, since the country now has much larger foreign exchange reserves than in 1998, when it last intervened to support its currency. At the end of August, Japan's foreign exchange reserves amounted to $1.17 trillion. In the spring of 1998, Japanese authorities spent about $21 billion propping up the yen on their own, equivalent to about 10% of the country's foreign exchange reserves at the time. However, there is also an opposite opinion. Thus, Bloomberg analysts believe that the Japanese government will not risk launching a unilateral intervention, given its previous bad experience. In 1998, only US support was able to turn the tide of the currency attack on the yen. Moreover, the actual participation of America was not even required. The Japanese currency began to rise on the news that the then US Treasury Secretary Robert Rubin was going to meet with Japanese Treasury Secretary Kiichi Miyazawa. As for today, America's help looks unlikely. Last week, the US Treasury confirmed its unwillingness to support any potential intervention in the foreign exchange markets. This position is not favorable for the yen. Reason #2: The Bank of Japan will continue to be dovish It is possible to argue about whether or not the Japanese government will decide on foreign exchange intervention for a long time. The only thing that most experts now agree on is its ineffectiveness at this stage, when the divergence in the monetary policy of the Fed and the BOJ continues to grow. According to the chief economist at S&P Global Market Intelligence Harumi Taguchi, the key reason for the yen's weakness is the continued increase in rates in America, while the BOJ keeps the indicator at an extremely low level. "If the position of the Japanese central bank on interest rates does not change, I see absolutely no point in intervention, even if it is supported by the United States," the analyst said. Of course, Kuroda cannot but be concerned about the yen's current position. Recently, he often talks about the need to take measures to support the currency, but every time he makes an amendment: the central bank does not intend to change its dovish guidelines. The market is also well aware that the BOJ now has no reason to cancel monetary stimulus and raise interest rates. The country's economy has not yet recovered from the COVID-19 pandemic, and inflation is not as high and sustainable as in other countries. That is why many experts are inclined to believe that at its next meeting, which will be held on the same dates as the Fed meeting, the Bank of Japan will once again confirm its commitment to ultra-soft monetary policy. Based on this, we can safely say that the downward trend in the yen will continue.   Relevance up to 10:00 2022-09-18 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. Read more: https://www.instaforex.eu/forex_analysis/321548
The USD/JPY Price Seems To Be Optimistic

The USD/JPY Pair Retreated From The High, Awaiting For PPI Report

TeleTrade Comments TeleTrade Comments 14.09.2022 12:52
USD/JPY flirts with daily low, around 143.00 mark amid chances of BoJ intervention   USD/JPY meets with a fresh supply and retreats sharply from the 145.00 neighbourhood. Jawboning by Japanese authorities points to an imminent intervention and boosts the JPY. The emergence of some selling around the USD also contributes to the intraday downfall. The USD/JPY pair faces rejection near the 145.00 psychological mark and retreats from the vicinity of a 24-year high retested earlier this Wednesday. The downward trajectory extends through the first half of the European session, though the pair manages to rebound a few pips from the daily low and is currently placed just above the 143.00 mark. A combination of factors fails to assist the USD/JPY pair to capitalize on the previous day's post-US CPI strong rally of over 300 pips. The Japanese yen strengthens across the board amid jawboning by Japanese officials and chances that the Bank of Japan (BoJ) may step in to arrest a freefall in the domestic currency. This, along with the emergence of some US dollar selling, exerts downward pressure on the major. That said, a recovery in the global risk sentiment - as depicted by a generally positive tone around the equity markets - could cap gains for the safe-haven JPY. Apart from this, a big divergence in the monetary policy stance adopted by the Japanese central bank and the Federal Reserve supports prospects for the emergence of some dip-buying around the USD/JPY pair. The BoJ remains committed to continuing with its monetary easing. In contrast, the US central bank is expected to keep raising interest rates at a faster pace to tame inflation. The bets were reaffirmed by the stronger US CPI report on Tuesday. The markets quickly started pricing in the possibility of a full 1% rate hike at the next FOMC meeting on September 20-21. This is evident from a fresh leg up in the US Treasury bond yields, which favours the USD bulls and should lend support to the USD/JPY pair. Nevertheless, the fundamental backdrop remains tilted firmly in favour of bullish traders. Hence, any subsequent decline could still be seen as a buying opportunity and remain limited. Market participants now look forward to the US Producer Price Index (PPI), due for release later during the early North American session. Apart from this, the US bond yields and the broader risk sentiment should provide some impetus to the USD/JPY pair.
The Commodities Digest: US Crude Oil Inventories Decline Amidst Growing Supply Risks

Markets Look Like Battlefields After The US Inflation Print. S&P 500, Dow Jones And Nasdaq All Plunged. Forex: Will BoJ Intervene?

Conotoxia Comments Conotoxia Comments 14.09.2022 15:22
Yesterday's presentation of inflation data in the United States shook financial markets. Investors, looking by the reaction in many markets, seemed to expect inflation to fall faster than the estimation presented. The markets were shaken. US inflation - a powerful blow to financial markets The August consumer price index report showed that inflation rose 0.1 percent on a monthly basis, despite forecasts for a 0.1 percent decline, while the annual rate of consumer inflation fell less than expected in August to 8.3 percent (consensus 8.1 percent). The higher-than-expected U.S. inflation reading and slower pace of decline may have given rise to speculation that the Fed may deliver a larger interest rate hike than 75 bps. The game may now be on for a 100 bp hike next week. Read next: Great Britain’s CPI Lower Than The Expected, Eyes On US PPI| FXMAG.COM At the end of Tuesday's session, the Dow Jones index was down 3.94 percent, the S&P 500 down 4.32 percent, and the Nasdaq Composite down 5.16 percent. All three major indexes broke a four-day streak of gains and posted their biggest one-day decline in more than two years. All sectors in the S&P index ended the session in negative territory, with communications services, technology and consumer products falling more than 5 percent.  Bitcoin had already fallen at one point, in a move initiated after the US data, to levels below $20000. This could mean a drop of more than 10 percent. The EUR/USD pair price, in turn, retreated below parity, recording a cumulative drop of more than 2 percent after the data. Such large changes in many markets could be fears of faster and larger interest rate hikes in the US. Source: Conotoxia MT5, US100 m30 How is the Fed's action priced in? According to the interest rate market, the chances of a 100bp hike on September 21 have risen to 34 percent. Previously, the market had not considered such a large US interest rate hike at all, and was considering a rate hike between 50 and 75 bp. The current pricing could lead to an increase in the range for the federal funds rate to between 3.25 and 3.5 percent, which in turn could mean that the market is pricing the end of the hike cycle no longer in the 3.9 percent region, but in the 4.2 percent region, which could also contribute to the strengthening of the USD. In the bond market, on the other hand, the yield on 2-year U.S. Treasury securities rose to its highest level since 2007, exceeding 3.7 percent. In the past, the level of 2-year bonds may have coincided with the target level of the federal funds rate for the hike cycle. Source: Conotoxia MT5, USDIndex D1 Yen struggles against dollar strength It seems that this morning only the Japanese yen is trying to fight the strength of the USD. This  might have to do with further news of possible intervention. Japan's Finance Minister Shunichi Suzuki said on Wednesday that currency intervention is among the options to combat the decline of the country's currency, the BBN news service reported.  "We are talking about taking all available options, so it is right to think that way," he said. - Suzuki told reporters after being asked if currency intervention in the form of yen buying was on the table. "Recent moves have been quick and one-sided, and we are very concerned. If such moves continue, we must respond, and we are not ruling out any options." - He added. A break of the 145 level by USD/JPY would   lead to intervention by Japanese authorities, David Forrester, senior FX strategist at Credit Agricole CIB, told Bloomberg. The problem facing the Ministry of Finance in the event of any FX intervention is that the upward movement of USD/JPY reflects the divergence between the Fed and BOJ, so the impact of any intervention would only be temporary, the Credit Agricole representative added. Daniel Kostecki, Director of the Polish branch of Conotoxia Ltd. (Conotoxia investment service) Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
At The Close On The New York Stock Exchange Indices Closed Mixed

On The New York Stock Exchange, The Securities Rose Yesterday

InstaForex Analysis InstaForex Analysis 15.09.2022 08:46
At the close in the New York Stock Exchange, the Dow Jones rose 0.10%, the S&P 500 rose 0.34%, and the NASDAQ Composite rose 0.74%. Chevron Corp was the top gainer among the components of the Dow Jones index today, up 3.86 points or 2.42% to close at 163.27. Quotes Johnson & Johnson rose by 3.33 points (2.06%), ending trading at 164.66. Merck & Company Inc rose 1.36 points or 1.59% to close at 86.95. The losers were shares of Honeywell International Inc, which lost 5.01 points or 2.71% to end the session at 179.97. 3M Company was up 2.44% or 2.94 points to close at 117.53, while Dow Inc was down 1.67% or 0.80 points to close at 47.07. . Leading gainers among the S&P 500 components in today's trading were Coterra Energy Inc, which rose 7.22% to hit 32.23, APA Corporation, which gained 6.72% to close at 41.74, and shares of Moderna Inc, which rose 6.17% to end the session at 139.40. The biggest losers were Nucor Corp, which shed 11.31% to close at 120.71. Shares of Centene Corp lost 6.79% to end the session at 83.92. Quotes of DISH Network Corporation decreased in price by 6.27% to 17.18. Leading gainers among the components of the NASDAQ Composite in today's trading were Avenue Therapeutics Inc, which rose 53.87% to hit 0.36, Aileron Therapeutics Inc, which gained 38.49% to close at 0.27, and also shares of Dawson Geophysical Company, which rose 41.44% to close the session at 1.57. The biggest losers were Neurobo Pharmaceuticals Inc, which shed 43.61% to close at 16.86. Shares of Vintage Wine Estates Inc shed 40.33% to end the session at 3.30. Quotes of Aditx Therapeutics Inc decreased in price by 38.22% to 11.43. On the New York Stock Exchange, the number of securities that rose in price (1,578) exceeded the number of those that closed in the red (1,506), while quotes of 124 shares remained virtually unchanged. On the NASDAQ stock exchange, 1,956 stocks fell, 1,770 rose, and 254 remained at the previous close. The CBOE Volatility Index, which is based on S&P 500 options trading, fell 4.07% to 26.16. Gold futures for December delivery lost 0.63%, or 10.90, to hit $1.00 a troy ounce. In other commodities, WTI October futures rose 1.68%, or 1.47, to $88.78 a barrel. Brent oil futures for November delivery rose 1.23%, or 1.15, to $94.32 a barrel. Meanwhile, in the forex market, the EUR/USD pair was unchanged 0.08% to 1.00, while USD/JPY fell 0.97% to hit 143.15. Futures on the USD index fell 0.15% to 109.36.   Relevance up to 05:00 2022-09-16 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. Read more: https://www.instaforex.eu/forex_analysis/292844
Stocks to keep an eye on in the second half of 2023

Energy Prices Remain Very Volatile, Activities In The Markets

Swissquote Bank Swissquote Bank 15.09.2022 10:31
US equities eked out small gains yesterday as dip buyers timidly came in, but risks remain tilted to the downside with the disappointing inflation figures, and the risk of the largest rail strike in the US since 1992. Crude Oil Prices Released yesterday, the US producer price data didn’t enchant investors. The headline figure fell for the second consecutive month but the core PPI strengthened, hinting that most of the easing in producer inflation was due to cheaper energy prices – which however remain very volatile, and which, more importantly carries a decent upside risk. The barrel of American crude flirted with the $90 mark yesterday, without however being able to clear resistance at this level. Energy companies gained despite news that Europeans are looking to raise $140 billion euros from energy companies to help households and businesses survive through winter. The situation on the stock market The S&P500 recover a part of losses yesterday, as Nasdaq gained 0.84%. But the risks remain clearly tilted to the downside. The US dollar remains relatively strong near the 20-year highs, the EURUSD consolidates below parity as gold slipped back below $1700 per ounce. The USDJPY retreated on expectation that the Bank of Japan (BoJ) could intervene to stop the yen’s depreciation. Ethereum trades around $1600 as Merger Upgrade is now imminent! Watch the full episode to find out more! 0:00 Intro0:24 Dip buyers return to a risky market2:31 US crude flirts with $90pb3:41 US rail strike risk weighs on sentiment4:55 Energy stocks rally despite EU measures to cope with crisis7:07 Gold under pressure7:50 BoJ could intervene to strengthen the yen8:52 Ethereum Merges today! Ipek Ozkardeskaya Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #US #PPI #inflation #rail #strike #USD #EUR #JPY #BoJ #rate #check #Gold #XAU #crude #oil #BP #XOM #Chevron #Coterra #windfall #taxes #energy #crisis #Bitcoin #Ethereum #Merge #update #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary ___ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr ___ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 ___ Let's stay connected: LinkedIn: https://swq.ch/cH
Navigating the Inverted Yield Curve: Implications for Currencies and Central Banks      User

Will The US Dollar Continue To Be Strong And To Keep Growing Or Maybe Situation Will Be Reversed

InstaForex Analysis InstaForex Analysis 15.09.2022 11:04
The US currency was swirled by a whirlwind of continuous movement, not giving it a break for almost a minute. The dollar has to be constantly in good shape to act ahead of the euro and other currencies. Against this background, experts fear the depletion of "dollar forces" and the subsidence of the USD in the long term. According to market players and analysts, the rally that led the greenback to the peak of the price since 1985 will continue. However, this causes great inconvenience to other currencies, up to their collapse. As a result, the means of payment of other countries are plunging against the USD or require a rapid increase in rates in order not to be at the bottom. The dollar's strong growth against a basket of currencies (by 15% in 2022) dealt a crushing blow to financial markets. The main victims were the euro and the yen, which collapsed to lows over the past 20 years. The pound had the hardest time, which fell to its lowest in 40 years. The catalyst for the widespread collapse of the market was the "hot" data on inflation in the United States. According to a report published on Wednesday, September 14, US inflation increased markedly in August, and decreased less year-on-year than the market expected. In the last month of summer, the consumer price index (CPI) increased by 0.1%. At the same time, experts expected the indicator to fall by 0.1% amid a steady decline in gasoline prices. However, this factor did not work due to a sharp increase in consumer spending in the United States. According to current data, the basic consumer price index in the country increased by 0.6%, which is twice as much as expected. At the same time, the annual core inflation rate soared from July's 5.9% to 6.3%. According to analysts, this is the highest value recorded after a 40-year high reached in March. In the current situation, gasoline prices in the United States fell by 10.6% on a monthly basis, but were partially neutralized by rising prices for LNG and electricity. However, in the future, the effect of cheaper energy came to naught due to the rapid growth of housing and medical care prices (they increased by 0.7% and 0.8%, respectively). Against this background, analysts' forecasts for a further rise in the interest rate by the Federal Reserve by 1 percentage point (pp) have intensified. Many experts began to lay such an increase at the Fed's next meeting, which is scheduled for September 20-21. Some of them expect an increase in a smaller volume (only by 0.75 percentage points). According to analysts, the current situation provides significant support to the dollar and at the same time is a challenge to global central banks. Many world central banks were faced with a choice: to observe the weakening of national currencies or slow down this process by selling USD and raising their rates. The current macro data from the United States turned out to be negative for the markets, experts summarize. At the same time, the Fed management recognizes that inflationary pressure in the country remains high and hinders economic growth. However, the central bank turned out to be a hostage to the situation, since in order for inflation to return to the 2% target, it is necessary to continue raising rates, and this should be done in an accelerated mode. Against this background, the US currency has steadily risen in price against the European one. The EUR/USD pair was trading at 0.9965 on Thursday morning, September 15. Since August inflation in the United States turned out to be higher than forecasts, market participants expect the Fed to raise the rate further (by 75 bps) at the upcoming meeting. Many experts are sure that now there are almost no factors that can prevent the dollar's growth. According to Rabobank's currency strategists, while US rates are rising, the greenback will strengthen. Analysts believe that this strengthening will continue until the end of 2022 and the beginning of 2023. The "tailwind" for the USD is the reliability and relative stability of the American economy. However, the prolonged strengthening of the greenback creates problems for US trading partners, as the growth in the value of imports denominated in dollars increases. This hinders the curbing of rampant inflation in a number of countries, experts emphasize. Asian countries, especially commodity importers, suffer the most in this situation. Against this background, the Japanese yen turned out to be the biggest outsider, which rapidly and sharply plunged. According to experts, the dollar rally will end sooner or later, but the timing of its completion is difficult to predict. According to economists, in the long term, a rate hike in the United States, which should slow down the economy, will play against the greenback. However, the Fed will have to take measures to slow down the national economy in order to reduce the current level of inflation. The result is a vicious circle, from which it is difficult for the dollar to get out. Currently, many market players are betting on USD growth, but analysts urge caution in this matter. In the short term, such tactics provide significant support to the greenback. At the moment, the market is in the process of reassessing expectations about the future course of the Fed's monetary strategy, especially regarding rates. Current economic reports from the United States increase the likelihood of a third consecutive Fed rate hike by 75 bps at the next meeting scheduled for September 20-21. Against this background, the markets allow an increase in the key rate by 100 bps at once, experts summarize.   Relevance up to 08:00 2022-09-20 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. Read more: https://www.instaforex.eu/forex_analysis/321776
The USD/JPY Price Seems To Be Optimistic

Look At Economic Situation Around The US Dollar-Yen Pair

InstaForex Analysis InstaForex Analysis 15.09.2022 11:20
After yesterday's pullback, the USD/JPY pair almost froze in flat, waiting for the next triggers. Today's macro data from the US should be the decisive factors that will set the route for the asset. In the middle of the week, the dollar-yen pair could not stay near the level of 145, where it ended up on Tuesday thanks to unexpected statistics on US inflation. Recall that in August, the consumer price index in the United States fell to 8.3% from the previous value of 8.5%, but exceeded market expectations. Economists had forecast annual inflation at 8.1%. The fact that inflationary pressures eased less than expected further strengthened traders' confidence in the Federal Reserve's determination regarding interest rates. Now the markets estimate a 63% probability of a September increase in the indicator by 75 bps. Expectations of a maximum rate hike – by 100 bps - also increased significantly. These hawkish scenarios gave a strong boost to the dollar, which has already risen by more than 20% against the yen since the beginning of the year due to discrepancies in the monetary policy of the Fed and the Bank of Japan. The USD/JPY pair again came close to the key mark of 145 on Tuesday, which, apparently, is a red line for the Japanese government. In order to prevent the yen from collapsing below this level, the Japanese authorities again intensified verbal intervention on Wednesday. However, verbal warnings no longer scare the market as much as they used to. Yesterday, the yen was able to recover only due to the fact that Japanese officials finally stirred. The exchange rate check initiated by the BOJ was the first harbinger of a possible actual intervention. Against this background, the dollar retreated, but, it seems, not for long. This morning, the greenback is trying to grow within a narrow price range. In Asian trading, a small support for the USD/JPY pair was provided by the comment of the representative of the ruling Liberal Democratic Party of Japan, Satsuki Katayama. The official said that the Japanese government will not be able to contain the further depreciation of the yen on its own, since the country does not have effective means to combat the rapid depreciation of the exchange rate. Also a positive factor for the asset was the report published on Thursday by the Ministry of Finance of Japan. According to the data, in August the country faced the largest trade deficit in the entire history of observations. Last month, the indicator increased from 1.43 trillion yen to 2.82 trillion yen. The gap turned out to be much larger than economists had predicted (2.4 trillion yen). The record growth of the trade deficit is caused by a sharp jump in imports of goods and services. In August, due to high energy prices and the fall of the yen, the indicator rose to 49.9% against the previous value of 47.2%. The trade deficit has been observed in Japan for 13 months. This is the longest period in the last seven years. The negative trade balance undermines the recovery of the country's economy. This is another argument in favor of the fact that the BOJ will not decide to change its monetary policy in the near future. Most analysts believe that the monetary divergence between Japan and the United States will continue to grow, as a result of which the pressure on the yen will remain. Experts expect increased volatility of the USD/JPY pair ahead of the meetings of the Fed and the BOJ, which will be held next week. As for the current dynamics of the asset, today the dollar can again demonstrate growth against the yen, if, of course, it receives support from macroeconomic statistics. A large portion of data is coming out on Thursday, but traders will be focused on retail sales for August. Economists predict that retail sales increased by 0.2% last month, after the indicator remained unchanged in July. The technical picture also shows the growth of the USD/JPY pair. Bulls are now getting hopeful for a firmer RSI and bullish MACD signals.   Relevance up to 08:00 2022-09-20 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. Read more: https://www.instaforex.eu/forex_analysis/321784
China's Deflationary Descent: Implications for Global Markets

Positive Moods On European Markets, The USD/JPY Pair And Gold Are In Downtrend

InstaForex Analysis InstaForex Analysis 15.09.2022 14:06
Strong data from the US pushed markets up ahead of next week's meeting of the Federal Reserve. Reportedly, consumer inflation rose in August, while manufacturing inflation fell by 0.1% m/m and 8.7% y/y. The positive reaction of investors obviously indicated the growing hopes of a slowdown in inflationary pressures, which led to the rise of US stocks and slight correction of Treasury yields and dollar. Now, a lot depends on the Fed's decision on raising rates, more precisely on the level at which it will increase. The central bank will base its decisions on the level of inflation. So far, stocks are trading in both directions, with Asian ones having multidirectional dynamics before the start of the European trading session. Meanwhile, local investors won back yesterday's losses in European and US stocks. Dollar is also moving in different directions after Treasury yields rose by 0.46% to 3.428%. While it is not necessary to say that trading in Europe will definitely start in a positive way, a rebound may be seen in markets if positive sentiment continues. This may happen if data on retail sales and jobless claims in the US do not turn out to be disappointing. Forecasts for today: USD/JPY The pair is trading below 0.6725. If negative trends continue, the quote may continue to decline towards 0.6685. XAU/USD Spot gold fell below 1692.50 due to the uncertainty over the results of next week's Fed meeting. Quotes may continue to drop to 1680.50.       Relevance up to 06:00 2022-09-17 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/321760
The US PCE Data Is Expected To Confirm Another Modest Slowdown

The US Yields And The US Dollar Likely Can Move In The Same Direction

Saxo Bank Saxo Bank 15.09.2022 14:26
Summary:  The US dollar remains firm after the shocking CPI data from Tuesday and with US Retail Sales for August today the latest data point ahead of the FOMC meeting next Wednesday, where a sizable minority are looking for 100 basis points from the Fed, while US long yields have run out of range to the upside. The Chinese yuan is trading weakly after China passed on easing rates any further overnight and despite the country moving to ease rules on property investment, with USDCNH hitting 7.00 today. FX Trading focus: USDCNH breaks above 7.00. USD eyes retail sales, new peak in long yields. The reaction in US yields and the US dollar after the far stronger than expected US August core CPI data from Tuesday is holding up well, with US yields all along the curve perched at or near the highs for the cycle and the 10-year US Treasury benchmark yield running out of range into the key high from June at 3.50%. The US Retail Sales report for August out shortly after this article is published is likely to drive the next step for US yields and the US dollar, which will likely move in the same direction. Somewhere out over the horizon, however, I wonder how the US dollar trades in the event a recession is afoot and investors are still marking down equities, not on a the challenge to multiples from higher yields, but on a profits recession. The past “norm” is for equities to only bottom out during the phase in which the Fed is rapidly easing to get ahead of a cratering economy. For now, the bout of risk off has seen NZD and NOK as the interesting pair of weakest currencies, with AUD and CAD not far behind and sterling struggling a bit more today, even as the market edges up the pricing of the Bank of England next week closer to 75 basis points (still only slightly more than 50/50 odds according to futures prices). Sterling almost can’t hope to perform well if risk sentiment But perhaps most importantly, the USD sell-off picked up its pace a bit today on USDCNH breaking above 7.00 for the first time since the summer of 2020 and despite constant PBOC pushbacks via setting the daily fixing stronger for the last three weeks and more on a daily basis. Overnight, China kept its rate unchanged as well, though there were a couple of bright spots in thew news from China overnight, as local authorities have listened to Xi Jinping’s calls for easing up on property investment with a raft of measures. As well, the Chengdu Covid lockdowns are easing. Still, any significant extension above 7.00 in USDCNH will have markets on edge, particularly if the 7.187 all time highs come into view. The USD strength and yield remaining pinned higher have emboldened prevented a further slide in USDJPY after USDJPY traded south of 143.00 overnight. We all know that the BoJ/MoF will more than likely step in if USDJPY trades north of 145.00 again, but note the more profound correction in crosses like AUDJPY, possibly a better place to speculate for a JPY resurgence if risk sentiment remains downbeat. That pair has rejected the recent extension above 97.00, though it probably needs to cut down through 95.00 together with tamer long global yields to suggest something bigger is afoot. Chart: AUDUSDThe Aussie caught a broad, if brief, bid overnight on a strong August jobs report, but wilted again in today’s trade as risk sentiment deflated once again and as the move lower in the CNH versus the US dollar picked up a bit of extra steam and crossed the psychologically important 7.00 level. Watching the lows for the cycle here below 0.6700 for a possible extension to at least 0.6500 on a break lower and a retest of the cycle lows from June. Table: FX Board of G10 and CNH trend evolution and strength.Interesting to note the CHF topping the leaderboard as EURCHF tries at the cycle lows today and Europe can’t get on the same page on its attempts to cap energy prices (drives risk of higher CPI outcomes and more CHF strength to offset). Elsewhere, the NZD is the weakest of the lot, while Japanese officialdom has impressed with its latest verbal intervention, as can be seen in the tremendous momentum shift over the last week in the broader JPY picture. Table: FX Board Trend Scoreboard for individual pairs.AUDNZD remains in a positive trend, but it’s at a multi-year range top as we watch whether a proper trend develops. Elsewhere, NZDUSD is grinding down into the psychologically challenging sub-0.6000 levels, while USDCAD is banging on the cycle resistance at 1.3200 and USDNOK is poking at local highs and only a bit more than a percent from its highest close since the pandemic panic of early 2020 around 10.25. Wondering if today will prove a pivot day for EURGBP that confirmed the up-trend. Upcoming Economic Calendar Highlights 1230 – US Weekly Initial Jobless Claims 1230 – US Sep. Empire Manufacturing 1230 – US Aug. Retail Sales Source: https://www.home.saxo/content/articles/forex/fx-update-usdcnh-breaks-above-700-usd-eyes-retail-sales-15092022
Kuroda Stayed On The Sidelines And The Yen Responded With Losses

Forex: Japanese Yen (JPY) - How Could BoJ's Intervention Look Like?

Jing Ren Jing Ren 15.09.2022 14:27
The yen has been, of course, on a wild ride lately. But there were some surprise moves yesterday which need some explaining, since they could shed some light on whether or not the USDJPY has hit a ceiling. There are some important implications for the future of the yen, and something traders need to be very careful about (hint: make sure stops are in place). The lead-up The yen has been weakening generally because the BOJ isn't raising rates while other central banks are. The BOJ isn't likely to raise rates in the foreseeable future, which makes the currency ripe for carry trading. On Tuesday, the USDJPY spiked higher after US CPI figures came out, because of speculation of an even stronger move by the Fed at the upcoming meeting. After the data, through the rest of the session, the pair drifted higher until it hit the 144.90 level, and then pulled back. That's when currency watchers noted that the BOJ had conducted a "rate check", and further announced a "doorstop" statement later in the day. The pair then pulled back rather dramatically, dropping over 180 pips in the course of a few hours. What is a "rate check"? The important thing isn't the check itself, but that it's something the BOJ does before it intervenes in the currency. Basically, the BOJ calls around to different banks asking what the exchange rate is. Presumably this is in preparation to take action, or to warn Japanese banks that action is likely. Read next: Australian Dollar (AUD): Reserve Bank Of Australia May Choose Less Aggresive Varaint As Unemployment Increased A Bit| FXMAG.COM That's why there was a reaction, but not a major move in the currency just yet. That it happened just as the pair was about to hit the 145.00 somewhat implies that's the level Japanese authorities will hold the line. That doesn't mean the market won't go above it marginally, or for brief periods. In fact, it would be expected that the market would "test" Japanese authorities to see if they actually will go through with intervention. What does intervention mean? It's been a couple of decades since the last time the currency pair moved up to similar levels, prompting a response from authorities. In that case, the pair got up to 147.00 and there was joint action from the US and Japan. The BOJ does conduct the operation, but it's at the direction of the Ministry of Finance, who "pay" for the move. Basically, the BOJ will buy yen on the market in a very large volume, enough to push the exchange rate down by several thousand pips all at once. The move is not pre-announced, and can happen more than once. The idea is precisely to keep the market from trying to push the pair up by "burning" out many of the long positions, and threatening to repeat at any moment. Read next: GDP Growth In New Zealand. Australia Unemployment Rate And Waiting For Initial Jobless Claims Report| FXMAG.COM That's why if you are trading with yen pairs over the next several weeks, as the USDJPY remains close to the 145.00, it's a very good idea to make sure your stops are in place and your portfolio is ready for a sudden, large move in the currency. But, remember, if the market behaves as the BOJ and MOF expect, then it's also quite possible that no intervention happens.
Asia morning bites - 16.05.2023

USD/JPY May Be Going Up And Down Shortly! Fed And BoJ Meeting Take Place Next Week! It May Be Not That Easy For BoJ To Intervene

Kenny Fisher Kenny Fisher 16.09.2022 10:44
After some mid-week volatility, USD/JPY has settled down. In the European session, the yen is trading quietly at 143.59. Markets eye BoJ meeting For anyone following the Japanese yen, next week promises to be interesting, at the very least. The Federal Reserve will hold its policy meeting on September 21st, with the Bank of Japan officials meeting the next day. The Japanese yen continues to lose ground against the dollar, and fell to 144.99 earlier this month, a new 24-year low. Japanese officials have responded with well-worn rhetoric about how Tokyo is concerned about the yen’s depreciation and warning that all options are on the table. We’ve heard this all before, but is this time different? Is Japan seriously contemplating a currency intervention to prop up the ailing yen? There has been some speculation that 145 could be a line in the sand for the MOF, but in fairness, there was similar talk when yen hit 130 and then 135, and the MOF and BoJ stayed on the sidelines. Read next: The Ethereum Market Remains Under Strong Bearish Pressure| FXMAG.COM The likelihood is that Tokyo will avoid such a dramatic move, which last occurred in 2011. The Ministry of Finance (MOF) and the Bank of Japan are not happy with the rapid descent of the yen, but an intervention would require the consent of the G-20, which is unlikely to give its consent. The BoJ made waves this week after a report that it had conducted a rate check, which was viewed as a possible prelude to an intervention. Finance Minister Suzuki has been coy about what moves he might make, and refused to comment on whether the BoJ had made a rate check. The BoJ has rigidly maintained its ultra-loose monetary policy in order to stimulate Japan’s fragile economy. As part of this policy, the BoJ has kept a firm hand on its yield curve control, and the price for this stance has been a freefall in the yen, which is done an astounding 30% against the dollar this year. With the Fed looking to hike next week by 75 basis point, and an outside chance of a massive full-point increase, the yen’s downtrend is likely to continue, barring a spectacular response from Japanese officials. USD/JPY Technical 1.4363 is the next line of resistance, followed by 144.81 USD/JPY has support at 142.56, followed by 141.88 This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Japanese yen - calm before the storm? - MarketPulseMarketPulse
Indonesia's Inflation Slips, Central Bank Maintains Rates Amidst Stability

Mixed Macroeconomic Data And Behavior Of Currency Pairs

Saxo Bank Saxo Bank 16.09.2022 14:18
Summary:  The US dollar continues to drive higher together with the pricing for the Fed’s terminal policy rate reaching new highs near 4.50%. The JPY managed to hold the line and then some against a surging greenback as the market seems unwilling to challenge the Bank of Japan for now despite the higher US yields. Elsewhere, the descent in sterling is verging on scary, with GBPUSD staking out new record lows since 1985 below 1.1400 as EURGBP broke the range highs. FX Trading focus: Sterling descent getting scary after weak UK Retail Sales. USDJPY stays tame even with stronger USD and higher US treasury yields. The USD arched to new highs this morning versus a majority of G10 currencies, with USDJPY the notable pair not participating in the move as the market seems unwilling to challenge the Bank of Japan for now. One of the proximate triggers for a shift lower in risk sentiment late yesterday was the weak result and guidance from FedEx after US trading hours. As well, US short treasury yields continue to rise and provide plenty of pressure on markets. As for USDJPY, arguably longer yields are a more important coincident indicator, and US long yields have not yet broken to new cycle highs (3.50% for the US 10-year Treasury benchmark) although they are pushing hard on that level. The short end of the US yield curve, continues to rise apace even as the predictions for next week’s meeting pulled back slightly, meaning that the “terminal rate” for the cycle is getting priced higher – and has nearly hit 4.50%, more than a hundred basis points above where it was in early August. Data from the US yesterday was mixed. The headline US August Retail Sales report was slightly stronger than expected at +0.3% MoM vs. -0.1% expected, but July was revised down to -0.4% from 0.0%. The core Retail Sales data was slightly weaker than expected at +0.3% ex Autos and Gas, likewise with a negative revision (down to +0.3% for July after +0.7% was reported). Important to note that the US reports Retail Sales in nominal dollar changes, so this report suggests stagnating volumes. The latest weekly jobless claims data point yesterday was the lowest since late May, extending the recent falling trend. The UK August Retail Sales data this morning, on the other hand, was distinctly weak and set off an extension lower in sterling, as EURGBP broke above 0.8722 for the first time since early 2021 UK reports Retail Sales in volumes, not in nominal prices, and the month-on-month data developments were extremely weak, pointing to a steep real growth slowdown. Sales including petrol fell -1.6% MoM in August and -1.5% ex petrol. The August Ex Petrol volumes dip takes the data below the 2019 level in August, the first time that has happened in this calendar year. Waiting for the close of trade today for next steps as we have quarterly “witching” of massive derivatives exposures in the US today and with it, possibly erratic trading. Very interesting to see the combination of USDJPY unwillingness to move today together with USDCNH on the rise (so CNHJPY dropping), while EURUSD is also a bit stuck and backing up after trying lower in the European morning today. Some USD exhaustion creeping in at least within the G3? And if risk sentiment continues to deteriorate, will it remain always a function of the rising Fed expectations, or can it jump horses to concerns for the economic cycle? In other words, the eventual chief question may be: what happens to the USD if bond and stocks diverge in direction? Chart: GBPUSDGBPUSD declines took on extra energy this morning in the wake of the weak August UK Retail Sales data that showed a sharp contraction in volumes in August, a sign of real GDP contraction. This took EURGBP to new highs since early 2021 (pointing that out as an indication of isolate GBPS weakness), while GBPUSD drove down to record lows since the mid-1980’s. Not sure what can bring relief for sterling here save for a halt to the relentless rise in US yields and/or thawing risk sentiment after the steep plunge this week. As for next level, only round, psychological ones seem relevant as the 1985 lows near 1.0500 are impossible to compare in real effective terms after 37 years. Bulls will have to hope that sentiment shifts here and for a quick rejection of the new lows to confirm a divergent momentum scenario (stochastic indicator turning back higher after new price lows posted with indicator not at new lows). EURCHF hit new cycle lows yesterday below 0.9550, but these were rapidly rejected. Without any catalyst I could identify, this looks like possible intervention – perhaps as energy prices have calmed, meaning that the SNB wants to lean a bit the other way now? Very curious to hear the SNB next Thursday. Table: FX Board of G10 and CNH trend evolution and strength.The stronger euro beginning to stick out, as does the JPY resilience, as the smaller currencies and sterling have traded weakest. Gold hit the skids on breaking below the big range level around 1,680. CNH is on the weak side, which is interesting, given the strong US dollar, but let’s watch 7.20 in USDCNH to see if there is any real fireworks potential. Table: FX Board Trend Scoreboard for individual pairs.JPY has strengthened enough to have a go at flipping stronger versus NOP and NZD today. More interested in whether the CNHJPY rate flips negative next week. Upcoming Economic Calendar Highlights 1200 – Poland Aug. Core CPI 1215 – Canada Aug. Housing Starts 1400 – US Sep. Preliminary University of Michigan Sentiment Source: https://www.home.saxo/content/articles/forex/fx-update-sterling-descent-takes-gbpusd-to-historic-low-16092022
At The Close On The New York Stock Exchange Indices Closed Mixed

Fall Of Indices At The Close Of The New York Stock Exchange

InstaForex Analysis InstaForex Analysis 19.09.2022 08:07
At the close on the New York Stock Exchange, the Dow Jones fell 0.45% to hit a monthly low, the S&P 500 index fell 0.72%, and the NASDAQ Composite index fell 0.90%. The leading performer among the components of the Dow Jones index today was Home Depot Inc, which gained 4.43 points (1.63%) to close at 275.97. Amgen Inc rose 3.48 points or 1.53% to close at 231.14. Johnson & Johnson rose 2.52 points or 1.53% to close at 167.60. The losers were Boeing Co shares, which fell 5.49 points or 3.67% to end the session at 144.29. Chevron Corp was up 2.60% or 4.17 points to close at 156.45, while Walt Disney Company was down 2.28% or 2.52 points to close at 108. 25. Leading gainers among the S&P 500 index components in today's trading were Iron Mountain Incorporated, which rose 3.35% to hit 55.29, Newmont Goldcorp Corp, which gained 3.09% to close at 43.71, and also Dollar Tree Inc, which rose 2.89% to end the session at 141.92. The biggest losers were FedEx Corporation, which shed 21.40% to close at 161.02. Shares of WestRock Co lost 11.48% to end the session at 34.15. Quotes of International Paper fell in price by 11.21% to 35.23. Leading gainers among the components of the NASDAQ Composite in today's trading were Panbela Therapeutics Inc, which rose 53.06% to hit 0.58, Applied Opt, which gained 50.40% to close at 3.76, and shares of Axcella Health Inc, which rose 29.57% to end the session at 2.41. The biggest losers were Aditx Therapeutics Inc, which shed 58.52% to close at 4.31. Shares of Esports Entertainment Group Inc lost 46.15% and ended the session at 0.18. Shuttle Pharmaceuticals Inc lost 45.94% to 8.99. On the New York Stock Exchange, the number of securities that fell in price (2294) exceeded the number of those that closed in positive territory (816), and quotes of 121 shares remained virtually unchanged. On the NASDAQ stock exchange, 2,586 stocks fell, 1,158 rose, and 233 remained at the previous close. The CBOE Volatility Index, which is based on S&P 500 options trading, rose 0.11% to 26.30. Gold Futures for December delivery added 0.38%, or 6.35, to hit $1.00 a troy ounce. In other commodities, WTI October futures rose 0.29%, or 0.25, to $85.35 a barrel. Brent oil futures for November delivery rose 0.81%, or 0.74, to $91.58 a barrel. Meanwhile, in the forex market, the EUR/USD pair remained unchanged 0.10% to 1.00, while USD/JPY fell 0.40% to hit 142.95. Futures on the USD index fell 0.02% to 109.43.   Relevance up to 05:00 2022-09-20 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. Read more: https://www.instaforex.eu/forex_analysis/293169
Kuroda Stayed On The Sidelines And The Yen Responded With Losses

Japanese Yen (JPY): Although Bank Of Japan Holds A Meeting, Inflation Rate Of 2.6% May Keep BoJ Away From Tightening

Kenny Fisher Kenny Fisher 19.09.2022 16:17
The Japanese yen is trading lower today. In the North American session, USD/JPY is trading at 143.52, up 0.44%. Japan’s Core CPI, a key inflation indicator, is expected to rise to 2.7% in August, up from 2.4% in July. Fed, BoJ to meet later this week Central banks will be in the spotlight this week, with the Federal Reserve meeting on Wednesday and the Bank of Japan on Thursday. The yen hasn’t posted a winning week since early August and fell to 144.99 earlier this month, its lowest level since 1998. The sharp depreciation of the yen promises to be high on the agenda at BoJ’s meeting. The yen has borne the brunt of the BoJ’s ultra-accommodative policy, which has kept a tight lid on Japanese government yields while US Treasuries are heading higher, thanks to the Fed’s continued tightening. This has left the yen at the mercy of the US/Japan rate differential, which continues to widen. The BoJ could provide relief to the yen by tightening policy, but Governor Kuroda has repeated that he will not tighten unless there is a clear indication that inflation is broad-based and sustained. With inflation at just 2.6%, the BoJ is in no hurry to tighten, unlike other major central banks, where soaring inflation is the number one priority. Read next: Because Of Interest Rate Decisions, This Week Major Forex Pairs As EUR/USD, US Dollar To Japanese Yen And GBP To USD May Be Rocking!| FXMAG.COM The BoJ and Japan’s Ministry of Finance have engaged in verbal rhetoric as the yen continues to slide, but without any action to back up their warnings, speculators continue to drive down the yen. After reports last week that the BoJ had conducted a rate check, speculation rose that Tokyo was considering a currency intervention, but such a drastic move still appears unlikely. The BoJ may use stronger language about its concern about the yen’s slide at this week’s meeting, but short of the Bank signalling a change in policy or hinting at intervention, the yen is unlikely to get any relief from the BoJ. USD/JPY Technical 1.4363 is the next line of resistance, followed by 144.81 USD/JPY has support at 142.56, followed by 141.88 This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. USD/JPY pushes above 143, Core CPI next - MarketPulseMarketPulse
Indonesia's Inflation Slips, Central Bank Maintains Rates Amidst Stability

The Major Currency Pairs On The Forex Market And Their Move Ahead Of Important Decisions

TeleTrade Comments TeleTrade Comments 20.09.2022 10:35
Here is what you need to know on Tuesday, September 20: Major currency pair trade in familiar ranges on Tuesday as investors move to the sidelines ahead of key central bank policy decisions. The US Dollar Index (DXY), which closed virtually unchanged on Monday, moves sideways slightly above 109.50 and the market mood improves modestly with US stock index futures rising between 0.2% and 0.3%. Later in the day, Building Permits and Housing Starts data for August will be featured in the US economic docket. Consumer Price Index (CPI) figures from Canada will also be watched closely by market participants. Wall Street Journal author Nick Timiraos, who correctly leaked the 75 basis points (bps) rate hike in July, published an article late Monday and refrained from suggesting that the Fed could raise its policy rate by 100 bps on Wednesday. The greenback lost some interest after this development and the DXY erased its daily gains. The benchmark 10-year US Treasury bond yield stays relatively quiet near 3.5% on Tuesday. Federal Reserve Preview: Forecasting 5% interest rates? Dollar to move on dot-plot, Powell's pledges. Earlier in the day, Sweden's central bank, Riksbank, announced that it raised its policy rate by 100 bps to 1.75%, compared to Reuters' estimate for a rate increase of 75 bps. With the initial reaction, EUR/SEK fell to a fresh daily low of 10.7305 but managed to recover to the 10.8000 area. During the Asian trading hours, the Reserve Bank of Australia's (RBA) September monetary policy meeting minutes showed that policymakers saw a case for a slower pace of rate increases as becoming stronger. AUD/USD's reaction to the RBA's publication was largely muted and the pair was last seen trading flat on the day at around 0.6730. Annual CPI in Canada is expected to decline to 7.4% in August from 7.6% in July. Ahead of this data, the USD/CAD pair trades in a tight range near the mid-1.3200s. EUR/USD managed to stage a rebound in the second half of the day on Monday and closed in positive territory above parity. The pair was last seen posting small daily gains near 1.0030. GBP/USD clings to modest daily gains at around 1.1450 early Tuesday. “There aren’t currently any negotiations taking place with the US and I don’t have any expectation that those are going to start in the short to medium term," British Prime Minister Liz Truss said regarding a potential trade deal with the US but these comments were largely ignored by market participants. The data from Japan revealed on Tuesday that the National CPI climbed to 3% in August from 2.6% in July. Although this print came in stronger than the market expectation of 2.6%, USD/JPY managed to hold its ground and was last seen rising 0.2% on the day at 143.50. Gold is having a tough time attracting buyers and trading in negative territory slightly above $1,670. The resilience of the 10-year US T-bond yield makes it difficult for XAU/USD to gather recovery momentum. Bitcoin shook off the bearish pressure late Monday but it's yet to reclaim $20,000. Ethereum gained nearly 3% on Monday but failed to preserve its bullish momentum early Tuesday. At the time of press, ETH/USD was down 1% on the day at $1,360.
Germany's Economic Challenges: The 'Sick Man of Europe' Debate and Urgent Reform Needs

The Forex Market Awaits Tomorrow's Fed Rate Hike Decisions

Saxo Bank Saxo Bank 20.09.2022 13:55
Summary:  These are remarkable times as the Riksbank manages to surprise the market with a full 100 basis point rate hike and yet EURSEK trades unchanged within half an hour of the decision. This is likely on faltering risk sentiment this morning in Europe as the market mulls the risk that the Powell Fed has come to realize that actions speak far louder than guidance, as we mark up the odds for a 100 basis point hike at tomorrow’s FOMC meeting. FX Trading focus: Fed’s obsession with not surprising may be a thing of past: look for 100 basis points after Riksbank went 100 bps this morning. The Swedish Riksbank surprised today with a 100 basis point hike to take the rate to 1.75%, a move only a minority were looking for. This, in addition to guidance that the Riksbank would look to continue hiking rates, took Swedish yields higher, but didn’t do much for the currency. The reaction there, in fact, was remarkable as EURSEK fell well over a percent on the decision only to trade above the level prevailing immediately before the announcement within five minutes and then rising to new cycle highs since March a bit over half an hour after the decision. As I wrote in this morning’s Quick Take, I suspect SEK weakness (EURSEK top of range, USDSEK near all-time highs of 11.04 from 2001) might have tipped the scales, though the krona was not mentioned explicitly in the Riksbank’s statement today. That takes us to the FOMC meeting tomorrow. I have suggested in recent comments that it is less material whether the Fed moves 75 or 100 basis points at tomorrow’s meeting, provided that the Fed maintains sufficiently strong guidance on the terminal rate by the end of this year and an even higher rate forecast for 2023, but my thinking has evolved this morning and I am already leaning far more in favour of the Fed delivering 100 basis points. One aspect that in the past might have held back the Fed from hiking more than the market has priced (80-85 bps priced in this morning, depending on the measure of expectations) was the seeming Fed obsession with having the rate decision fully priced before the fact as was so patently obvious ahead of the June 16 FOMC meeting, which saw the leak of a WSJ article by noted Fed whisperer Nick Timiraos suggesting a 75 basis point move when the market was priced for only a 50-bp move. Given the stark Jackson Hole speech from Fed Chair Powell and the strong CPI data and other resilient US data, I wonder if this Fed is happy to change behaviour and let a proper surprise rip the market with a 100-bp move tomorrow together with a strong lifting of guidance and a 2024 PCE core forecast lift from its 2.3% level. Even better would be a 112.5 move that does away with the silly quarter-point upper-lower bound of the Fed policy rate and sets the rate to 3.50%.  Already, given that the market’s thinking is shifting in the direction of a 100-bp move tomorrow, the Fed almost has to do so or it will be delivering a dovish surprise with anything less. Fed actions will speak louder than guidance. Chart: USDJPYGet ready for chaos in USDJPY as US 10-year yields are already rising to new cycle highs ahead of the FOMC meeting and the Bank of Japan meeting only hours later in Asia’s Thursday session. The Bank of Japan and Ministry of Finance achieved a modicum of respect with their latest verbal intervention, as fresh highs in long US treasury yields haven’t seen USDJPY challenge the 145.00 level yet, but if the Bank of Japan fails to shift after a more hawkish Fed (our bias), then watch out for significant volatility risk to the upside, followed by a likely intervention fight to follow, as discussed in my colleague Charu’s latest excellent piece.   RBA minutes overnight were nothing to write home about for Australian rates, but AUDNZD jumped higher through the key 1.1250 area resistance, a possibly seismic move we have been out the lookout for since the pair approached that level a few weeks ago. We have argued that a significant resetting higher of the currency pair is possible – possibly toward 1.2000 and higher – given the diverging trajectories of the two countries’ current accounts. Table: FX Board of G10 and CNH trend evolution and strength.The kiwi is getting squashed and the RBNZ may have to change its mind about where the policy cycle may have to go at some level of NZD weakness. Elsewhere, watching the G3 over the FOMC to see if a hawkish surprise can continue to drive USD strength there as well as versus the weaker currencies. If we are set to test new equity bear market lows, SEK may be set for extended weakness and USDSEK may be set for a go at its all time high above 11.00 as EURSEK is also threatening higher. Table: FX Board Trend Scoreboard for individual pairs.AUDNZD has torn above resistance – big development there, even if nominally, there are some shreds of resistance up to 1.1430 before the big space opens up on the chart. Elsewhere, EURSEK trades top of range despite and USDSEK is 2% from all time level of 2001 ahead of FOMC meeting tomorrow. Interesting that USDJPY remains range-locked despite US 10-year yield at new highs this morning – helmets on there as noted above. Upcoming Economic Calendar Highlights 1230 – Canada Aug. Teranet/National Bank Home Price Index 1230 – US Aug. Housing Starts & Building Permits 1230 – Canada Aug. CPI  1700 – ECB President Lagarde to speak Source: https://www.home.saxo/content/articles/forex/fx-update-riksbank-raises-risk-of-100-bp-hike-from-fomc-20092022
Another Factor Putting  Downward Pressure On The USD/JPY Pair

Another Factor Putting Downward Pressure On The USD/JPY Pair

TeleTrade Comments TeleTrade Comments 21.09.2022 11:00
USD/JPY struggles to capitalize on its modest intraday uptick on Wednesday to a one-week high. The anti-risk flow benefits the JPY and caps the upside amid a modest fall in the US bond yields. Strong follow-through USD buying offers some support ahead of the key FOMC policy decision. The USD/JPY pair struggles to find acceptance above the 144.00 mark and retreats from a one-week high touched this Wednesday. The pair slides back below mid-143.00s during the early European session and is pressured by reviving demand for the safe-haven Japanese yen, though lacks follow-through selling. The market sentiment remains fragile amid concerns that rapidly rising interest rates will lead to a deeper global economic downturn. Apart from this, headwinds stemming from China's zero-covid policy and the protracted Russia-Ukraine war have been fueling recession fears. This, in turn, tempers investors' appetite for riskier assets and is driving haven flows towards the JPY. The anti-risk flow is reinforced by a modest pullback in the US Treasury bond yields, which is seen as another factor exerting some downward pressure on the USD/JPY pair. That said, a strong pickup in the US dollar demand, bolstered by hawkish Fed expectations, should continue to lend support to spot prices and help limit deeper losses ahead of the key central bank event risks. The Federal Reserve is scheduled to announce its decision at the end of a two-day policy meeting on Wednesday and is widely expected to deliver another supersized 75 bps rate increase. The markets also seem convinced that the US central bank will stick to its aggressive rate=hiking cycle to tame inflation, which should act as a tailwind for the US bond yields and the greenback. Hence, the focus will remain glued to the updated economic projections, the so-called dot plot and Fed Chair Jerome Powell's comments at the post-meeting press conference. Investors will look for fresh clues about the future rate hike path. This, in turn, will play a key role in influencing the USD price dynamics and help determine the near-term trajectory for the USD/JPY pair. This will be followed by the Bank of Japan meeting on Thursday. The Japanese central bank remains committed to maintaining ultra-low interest rates and dovish policy guidance. This marks a big divergence from a more hawkish stance adopted by other major central banks, which supports prospects for an extension of the USD/JPY pair's recent strong appreciating move.
How Will The Divergence Of Interest Rates In The US And Japan Affect The USD/JPY Pair

How Will The Divergence Of Interest Rates In The US And Japan Affect The USD/JPY Pair

InstaForex Analysis InstaForex Analysis 21.09.2022 13:04
Tonight, the Federal Reserve will announce another increase in interest rates, and a few hours later, the Bank of Japan will make a statement. In anticipation of the climax, the USD/JPY pair shows volatility. What helps the dollar? The US central bank began a 2-day meeting on monetary policy on Tuesday. The long-awaited verdict on interest rates will be announced this evening. Most analysts predict that the central bank will raise the indicator by 75 bps again. There is also an opinion that the Fed may further strengthen its anti-inflationary campaign, since previous measures were ineffective. Recall that the latest data on inflation in the United States greatly disappointed the market. The August report published last week showed an insignificant slowdown in consumer price growth. Last month, inflation in America was 8.3% year-on-year, which is still significantly higher than the Fed's target of 2%. Given the disappointing statistics, some market participants began to incline to the fact that at the September meeting, the US central bank will begin to act more aggressively and raise rates by 100 bps. Increasing speculation on this topic dispersed ahead of the yield of 10-year US bonds. Yesterday, the indicator jumped to an 11-year high of 3.59%. The surge in profitability provoked a sharp positive dynamics of the dollar. The DXY index tested a 2-week peak at 110.27 on Tuesday. According to tradition, the greenback made the steepest ascent against the Japanese currency. On the first day of the Fed meeting, the USD/JPY asset was again above the 144 mark. The dollar also held steady at this level at the beginning of Asian trading on Wednesday. Additional support for the greenback was provided by expectations of a dovish speech by Bank of Japan Governor Haruhiko Kuroda. The BOJ's monetary policy report will be released tomorrow morning. Most experts predict that the Japanese central bank will maintain its ultra-soft monetary rate. In this case, the divergence in US and Japanese interest rates will increase even more, which will contribute to the further rally of the USD/JPY pair. What supports the yen? However, not all experts share optimism about the dollar-yen asset. There is an opinion that in the short term, the quote may face serious obstacles that will limit its growth. This is exactly what happened today towards the end of the Asian session. The USD/JPY pair turned sharply to decline and plunged below the 144 mark. Several factors put pressure on the dollar. One of them is another wave of speculation about a possible currency intervention. On Tuesday evening, the former head of the currency department of the Japanese Ministry of Finance Tatsuo Yamasaki said that the Japanese authorities will not wait for the green light from the United States and will resort to unilateral intervention when they see fit. "The exchange rate check initiated by the Bank of Japan last week means that the government is now ready to take action at any time. I do not see any serious obstacles to intervention, especially since Japan previously conducted almost all of its interventions unilaterally," he stressed. According to Yamasaki's forecast, Japanese politicians will press the button if another strong speculative movement of the yen occurs over the next few days. In addition to the growing risk of intervention, the pressure on the USD/JPY pair is now exerted by an unexpected increase in expectations regarding a possible change in the rhetoric of the BOJ. Of course, given Kuroda's previous dovish statements, no one expects him to suddenly change his shoes and move to the hawk camp. But we cannot rule out another option: the BOJ may well take a neutral position. The probability of such a scenario has increased dramatically in the light of the latest inflation data. According to the report of the Japan Statistics Bureau, the national consumer price index was 3% in August, which is higher than the forecast and the July value of 2.6%. In addition, the core inflation indicator, which excludes food and oil prices, also increased in August. It rose to 1.6% against 1.2% recorded a month earlier. As we can see, inflationary pressure in the country is growing, and it is increasingly difficult for the BOJ to ignore this problem and postpone its solution. Therefore, there is hope that this month the BOJ will still consider the option of switching to a neutral monetary policy. In this case, the yen may receive short-term support, and the USD/JPY pair will have another rollercoaster ride. Relevance up to 10:00 2022-09-24 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. Read more: https://www.instaforex.eu/forex_analysis/322268
USD/JPY: Bank Of Japan Meets Holds A Meeting On Thursday, But A Change In Monetary Policy Is Not Expected

USD/JPY: Bank Of Japan Meets Holds A Meeting On Thursday, But A Change In Monetary Policy Is Not Expected

ING Economics ING Economics 21.09.2022 15:23
USD/JPY continues to show limited movement this week. In the North American session, USD/JPY is trading at 144.10, up 0.27%. BoJ unlikely to change policy The Japanese yen has depreciated by over 20% this year, and the yen’s slide will be high on the agenda at the Bank of Japan’s meeting on Thursday. We could see some strong rhetoric expressing deep concern about the yen, but the central bank has stayed on the sidelines during the yen’s long slide and I don’t expect that to change. The BoJ is committed to its ultra-accommodative policy, in order to boost Japan’s weak economy. Inflation has been rising, but Governor Kuroda has said he won’t tighten policy until it’s clear that inflation is sustainable, which would mean solid wage growth. There have been some rumblings about currency intervention by Tokyo, and the yen received a short boost in the arm earlier in September, after a report that the BoJ had conducted a rate check, which could have been a prelude to intervention. Japan hasn’t taken such a drastic move since 2011 and would require the consent of the G-20 to do so. As part of its loose policy, the BOJ has been very firm with its yield curve control, and the yen has borne the brunt of this policy, as the US/Japan rate differential continues to widen. With the Federal Reserve poised to raise rates by 75 or even 100 basis points later today, the outlook for the yen appears grim. The markets are anxiously awaiting the Fed’s rate announcement, as well as the Fed’s quarterly economic forecast. This will include projections for unemployment, inflation and interest rate levels. If Fed Chair Powell’s message is ‘higher for longer’ with regard to rate levels, investors could respond by sending the US dollar higher. USD/JPY Technical There is resistance at 144.71 and 146.49 USD/JPY has support at 143.19, followed by 141.88 This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Japanese yen steady ahead of Fed, BoJ - MarketPulseMarketPulse
Forex: How Could BoJ's Moves Affect USD/JPY (US Dollar To Japanese Yen)?

Forex: How Could BoJ's Moves Affect USD/JPY (US Dollar To Japanese Yen)?

FXStreet News FXStreet News 21.09.2022 16:13
With the rate differential widening, there is little room for USD/JPY slides. The Bank of Japan is widely anticipated to maintain its monetary policy unchanged. USD/JPY is in a consolidative phase near a two-decade high of 144.98. Following the US Federal Reserve’s policy announcement, it will be the turn of the Bank of Japan to decide on its monetary policy. Against the tide, the BOJ is widely anticipated to maintain the status quo, leaving rates at record lows of -0.1% and the yield curve control policy on hold. The latter means the central bank will continue unlimited bond purchases to keep the yield on the 10-year government bond around 0%. Finally, the central bank is expected to confirm the end of its special coronavirus financing program in September, as previously announced. The Japanese central bank´s strategy to maintain inflation at 2% stopped working five months ago. According to official figures, the annual inflation rate rose by 3% in August from 2.6% in the previous month. The Consumer Price Index rose for twelve consecutive months, and while it remains far below that of its major counterparts, the global pressure points to a further upside. As Japan is a net energy importer, the Russian conflict is also causing an increased trade deficit in the country. As a result of this situation, the Japanese yen plunged to a two-decade low against its American rival. However, there are null chances the BOJ will suddenly change course and decide on quantitative tightening. Formal intervention in the making? There is, however, one caveat. Bank of Japan Governor Haruhiko Kuroda has reportedly conducted a foreign exchange check, which somehow opens the door for formal intervention. The central bank meeting could be the perfect time to announce a measure in that direction The imbalance with all other central banks is likely to keep USD/JPY on its way up, although an unexpected tightening could result in the pair plummeting hundreds of pips. Nevertheless, and as long as the rate differential keeps widening, the pair will likely continue to reach record highs. USD/JPY possible reactions The USD/JPY pair has been consolidating gains after reaching 144.98 on September 7, without technical signs of long-term bullish exhaustion. Should policymakers hint at some form of tightening, there’s still little room for the JPY to add. Market players would need action to react to the event rather than promises. The base of the latest range is the 141.50 price zone, a potential bearish target should Japanese policymakers drop the yield curve control or unexpectedly hike rates. A break below the level could trigger large stops and result in USD/JPY nearing the 140.00 figure. Formal intervention could also take its toll on USD/JPY, although the potential slump will depend on the measures announced. The impact of the latter could be short-lived. On the other hand, an on-hold decision could take the pair beyond the aforementioned two-decade high.
The Run Higher In Japanese Yields Is Likely To Create Further Volatility In Global Markets

Can USD/JPY Near 150.00? Bank Of Japan Didn't Surprise Markets, But BoJ Members Comments Are Quite Interesting

ING Economics ING Economics 22.09.2022 11:55
The Bank of Japan, as expected, left monetary policy unchanged, which prompted USD/JPY to pass the145 handle vs the USD. Top FX official, Mr. Kanda, reiterated his warnings about FX interventions when needed, while Governor Kuroda did not significantly change his rhetoric on the currency.  -0.1% BoJ's policy rate   As expected The BoJ's decision to stay pat was unanimous and forward guidance is flagging the downside risk The Bank of Japan has made it clear that it will stick with its ultra low monetary policy until inflation stays at around 2% in a more sustained fashion. In addition, the BoJ decided to phase out its pandemic relief loan programme which were suppsed to terminate in September. Instead, part of the programme will extend until March next year. Taken together with today's results, the forward gudiance indicates downside risks for the economy and policy normalization is still far away. There are four policy meetings left until Governor Kuroda retires next April, and there is little possibility of policy change at these four meetings. Also, it is still too early to tell but it appears that it will take some time for the BoJ to make any policy changes even after Governor Kuroda steps down. Government efforts to curb inflation continue mainly through fiscal support, not through FX intervention With the weaker yen pushing import goods prices higher, the government is expected to mitigate negative shocks from the price increase through fiscal support. The industry ministry announced that the gasoline subsidy for oil distributors is set to rise to 36.7 yen (about USD0.25) per litre for the seven days from Thursday (vs 35.6 yen a week earlier). The temporary subsidy programme was introduced in January and has been extended several times since then. We expect the subsidy programmes for oil and food, and some cash transfer programmes targetting low-income households, to continue.   Shortly after the BoJ's rate decision meeting Japan's top fx official, Mr. Kanda, said that the government could conduct stealth interveion in the fx market when needed. The government has not stepped into the fx market yet. We think that FX market intervention is possible, but that this only aims to smoothe out volatile currency movement, not to change the course of currency depreciation. Market intervention is not an effective way to stablize prices or bring the JPY down below 145. With Governor Kuroda's comments that BoJ future guidance won't need to change for the long-term, this will likely put more pressure on the currency.  USD/JPY: Collision course for 150? In response to unchanged BoJ policy and increasing doubts about the political feasibility of FX intervention, USD/JPY has traded close to 146. As above, Japanese authorities will struggle to reverse a powerful dollar bull trend with intervention. We also assume that the bar is exceptionally high for the Japanese to receive approval for FX intervention from the US Treasury. Washington will argue that if Japan wants a stronger yen it should hike rates. This suggests that USD/JPY can continue to push towards 150 (our rates team sees US 10 year Treasury yields biased to 3.75%, if not 4.00%) and Japanese authorities increasingly hitting the wires with intervention threats. The next big event risk now may be the 12 October meeting of central bank governors and finance ministers in Washington. The Japanese will have to convince US authorities that the strong dollar is a problem, such that G20 FX language is altered. That is a tough task, with the Fed still seemingly welcoming dollar strength.      Read this article on THINK TagsBank of Japan Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Asia morning bites - 16.05.2023

Forex: What Is Actually Driving US Dollar To Japanese Yen (USD/JPY)?

ING Economics ING Economics 22.09.2022 12:01
It has been a wild ride for the Japanese yen today. USD/JPY initially jumped over 1% earlier today but has reversed directions. In the European session, USD/JPY is trading at 142.27, down 1.24%. BoJ stays pat, MoF issues warning With the Japanese yen continuing to fall, there have been rumblings that the Japanese government could respond with a currency intervention. The yen even posted gains earlier this month, after a report that the Bank of Japan had conducted a rate check, which could have been a prelude to intervention. The markets have heard plenty of verbal rhetoric from Japanese officials expressing deep concern about the yen, but no action followed. With USD/JPY rising just short of the 145 line this month, there was speculation that “this time would be different” and the BoJ would not sit idly by at today’s policy meeting. In the end, however, the BoJ stayed on the sidelines and maintained its policy settings. The BoJ affirmed its ultra-accommodative policy and said it would increase stimulus if needed. Predictably, the yen took a tumble, falling as low as 145.90. Today’s drama was far from over, however. After the decision, the country’s top currency diplomat and Vice-Minister of Finance, Masota Kanda issued a warning that the government was ready to take action at any time to prop up the yen and could conduct “stealth intervention”. The markets are taking Kanda’s threat and USD/JPY has moved sharply lower. The tug-of-war between the Ministry of Finance and the Bank of Japan is likely to continue, which should translate into plenty of movement from the yen. Read next: Can USD/JPY Near 150.00? Bank Of Japan Didn't Surprise Markets, But BoJ Members Comments Are Quite Interesting| FXMAG.COM In the US, the Federal Reserve raised rates by 0.75%, as expected. This brings the benchmark rate to 3.25%, which is considered restrictive territory. The Fed’s economic projections were more hawkish than expected, with unemployment projected to hit 4.4% in 2023 and the Federal funds rate to rise to 4.6% in this cycle. The Fed has signalled that inflation remains priority number one, even at the price of a recession. USD/JPY Technical USD/JPY tested resistance at 144.71 but then retreated. Above, there is resistance at 146.49 USD/JPY is testing support 143.19. The next support line 141.88 This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Yen goes on roller-coaster after BoJ meet - MarketPulseMarketPulse
Market Trends and Currency Positioning: USD Net Short Position, Euro and Pound Analysis - 22.08.2023

The Japanese Yen Has The Worst Performer Among The G-10 Currencies

InstaForex Analysis InstaForex Analysis 22.09.2022 12:41
Japan intervened in the forex market for the first time since 1998 as the yen's losses intensified amid a divergence in the country's monetary policy with the United States. Yen hit 142.48 per dollar after falling above 145 per dollar because the Bank of Japan maintained ultra-low interest rates following the Federal Reserve's decision the day before to raise its key rate by 75 basis points. Japanese authorities have stepped up verbal warnings in recent weeks, stressing that the government is ready to take action at any time and may carry out covert intervention. This is very surprising as the country has long been criticized for tolerating or even encouraging a weak currency on behalf of its exporters. The last time Japan strengthened yen through direct intervention was during the Asian financial crisis in 1998, when the exchange rate hit 146 and threatened the fragile economy. It has also previously intervened around 130 to weaken the currency in 2011. This year, yen has fallen about 20% against dollar, making it the worst performer among the G-10 currencies. But Japanese businesses and households are becoming increasingly vocal about the negative impact of the weaker yen as commodity and energy costs rise. Further declines will most likely put pressure on the consensus between a central bank determined to spur inflation and a government desperate to avoid a cost-of-living crisis. Relevance up to 11:00 2022-09-23 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/322405
Saxo Bank Podcast: The Upcoming Bank Of Japan Meeting, A Look At Crude Oil, Copper And More

US Dollar To Japanese Yen (USD/JPY): Bank Of Japan Did IT!

ING Economics ING Economics 22.09.2022 13:59
Japanese authorities have today intervened to sell USD/JPY for the first time since 1998. With the Fed turning ever more hawkish and the BoJ still printing money, it looks like the Japanese government wanted to stop a quick run to 150. Japanese authorities could well be doing battle with the FX market for the next 6-9 months as the dollar stays strong Japan's Ministry of Finance The warnings were there Over recent weeks the warnings from Tokyo had been building. Descriptions of one-sided moves and moves out of line with fundamentals morphed into more explicit threats to intervene. Today those threats materialised in intervention, with the Bank of Japan selling USD/JPY to the market from around the 145.70 level. The Ministry of Finance's website suggests it now reports intervention on a bi-monthly basis. The next release of data is on 30 September. Comparisons with markets 20-plus years ago come with the appropriate health warning. For what it’s worth, when Japanese authorities started intervening to sell USD/JPY in December 1997, they made a splash by buying around JPY1trn over a consecutive three-day period – i.e. they sold close to US$8bn. Objectives and outlook Presumably, Tokyo wanted to break the cycle of an ever-higher USD/JPY, even though Japan’s policy of effectively draining liquidity with JPY buying operations is at odds with the BoJ’s ongoing JPY-liquidity add through its various quantitative easing programmes. Japanese officials will be well aware of this contradiction and probably hope to slow or stabilise USD/JPY – rather than actively seek a reversal of the very powerful dollar bull trend. We are also a little surprised that Tokyo went with the intervention. Either authorities had Washington’s blessing or they wanted to flex their domestic policy muscles against the overriding G20 mandate of flexible exchange rates. The issue now will be whether G20 central bankers and finance ministers agree that FX markets have become disorderly when they issue their next Communique on 12 October. Clearly, investors are going to think twice about paying for USD/JPY over 145 now. And one can argue that we will now enter a volatile 140-145 trading range. But expect investors to be happy to buy dollars on dips near 140/141 knowing that Tokyo will find it impossible to turn this strong dollar tide – a tide that should keep the dollar supported through the remainder of this year.      BoJ sells USD/JPY for the first time since the late 90s Source: Japanese MoF, ING Read this article on THINK Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Things May Soon Get Better In The Chinese Markets

USD/JPY rebounds following a massive over 500 pips intraday slump, back around mid-141.00s

FXStreet News FXStreet News 22.09.2022 15:38
USD/JPY retreats sharply from a fresh 24-year peak after Japan intervenes in the FX market. The intraday USD corrective pullback from a two-decade high contributes to the steep decline. Rising US bond yields, the Fed-BoJ policy divergence limits any further losses, at least for now. The USD/JPY pair witnessed a dramatic intraday turnaround on Thursday and plunges over 550 pips from the vicinity of the 146.00 mark, or a fresh 24-year high touched this Thursday. The pair maintains its heavily offered tone through the early European session and hits a nearly three-week low in the last hour, though rebounds thereafter. Japanese authorities intervened in the forex market for the first time since 1998 to stem the rapid decline in the domestic currency and trigger a massive sell-off around the USD/JPY pair. The strong intraday rally in the Japanese yen gives the US dollar bulls to take some profits off the table, especially after the recent strong run-up to a two-decade high. This was seen as another factor that aggravated the bearish pressure surrounding the major. That said, a recovery in the risk sentiment, as depicted by a generally positive tone around the equity markets, should keep a lid on any further gains for the safe-haven JPY. Apart from this, a fresh leg up in the US Treasury bond yields, bolstered by a more hawkish stance adopted by the Federal Reserve, supports prospects for the emergence of some USD dip-buying. This, in turn, assists the USD/JPY pair to rebound over 100 pips from the daily low. It is worth recalling that the Fed raised interest rates by another 75 bps on Wednesday and signalled more large rate increases at its upcoming policy meetings. In contrast, the BoJ left its policy settings unchanged and reiterated that it will continue powerful monetary easing. This marks a big divergence in the Fed-BoJ policy outlooks, which has been a key factor behind the yen's slump of over 25% against its American counterpart since the beginning of 2022.
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Forex: Finally, Bank Of Japan (BoJ) Intervened! Euro: Could Today's Speeches Support Euro?

ING Economics ING Economics 23.09.2022 09:25
After a tumultuous week in FX where even the US Treasury understood Japan’s need for FX intervention on the back of ‘heightened volatility’, markets may be more calm today. The Central and Eastern Europe region is still looking for solid ground after the news from Russia and Hungary remains the number one topic USD: Calm down Yesterday’s FX intervention from the Bank of Japan (BoJ) has slowed the dollar bull trend little. The amount of dollars sold will not be revealed until 30 September, but it should be in the billions. While the US Treasury said the US did not jointly intervene with the BoJ, the fact that it said it ‘understood’ why the intervention took place could raise expectations that G20 finance officials tweak the laissez-faire FX language in their communique when they meet on 12 October. We doubt this intervention puts a top in the dollar, but investors will think twice about paying for USD/JPY over 145 now that the BoJ has started its intervention campaign. The US data calendar is light today and FX markets may choose to consolidate in narrow ranges after a volatile week. DXY to consolidate well within a 110.50-111.50 range. Chris Turner    EUR: PMIs to keep euro capped EUR/USD has remained on the back foot in line with the global risk sentiment and the market’s concerns about the latest developments in the Russia-Ukraine conflict. Today’s highlight in the eurozone will be the release of September PMIs, and investors are expecting a further drop in economic contraction territory. That should keep European sentiment weak, especially after yesterday’s consumer confidence hit a record low, and may prevent any relief rally in the EUR for the time being. The 0.9800 level is looking increasingly fragile. On the European Central Bank side, two hawks are set to speak: Bundesbank President Joachim Nagel and Latvia’s Martins Kazaks. Chances of hawkish comments lifting the euro at this stage are rather slim though. Elsewhere in Europe, markets are digesting two central bank decisions: in Switzerland (a 75bp hike) and in Norway (a 50bp hike). The former triggered a squeeze in EUR/CHF positions which led to a post-meeting rally, possibly due to some investors having expected a Riksbank-style 100bp move. However, we do not expect the EUR/CHF rally to last, since – as discussed in this article – we think the Swiss National Bank will guide the nominal EUR/CHF exchange rate lower to keep the real rate stable. The Norges Bank 50bp hike was largely expected and was followed by a very muted NOK reaction. As highlighted in our meeting review – we noticed a dovish tilt in yesterday’s policy message, as the Bank signalled how a slower pace of tightening may be warranted now that the Norwegian economy is showing signs of a slowdown. However, we would be careful before ruling out another 50bp hike in November just yet. All this is still set to be quite a secondary theme for NOK, which remains driven by external factors and faces lingering downside risks due to its very high beta to global risk dynamics. Francesco Pesole GBP: Fiscal event planning Sterling net-net was a little lower after yesterday’s divided Bank of England hike. Today sees the big reveal of Chancellor Kwasi Kwarteng's ‘fiscal event’. As noted recently, typically looser fiscal and tighter monetary policy is a positive mix for a currency – if it can be confidently funded. Here is the rub – investors have doubts about the UK’s ability to fund this package, hence the Gilt underperformance. With the BoE committed to reducing its Gilt portfolio, the prospect of indigestion in the Gilt market is a real one and one which should keep sterling vulnerable. We favour GBP/USD pressing 1.10 over the next month and EUR/GBP pressing 0.88. Chris Turner CEE: Expected rating outlook downgrade is another blow to the forint Hungary will again top today's calendar in the region. Apart from the labour market data, we will also hear Finance Minister Mihaly Varga's speech and later today Moody's will publish a rating review. Given the still uncertain developments in the discussions between the European Commission and the Hungarian government, we expect a downgrade in the outlook to negative, just as S&P did in August. The FX market in the region is looking for solid ground after the news from Russia, which for now may be provided by the stability of the gas price, and which remains the main driver. On the other hand, interest rate differentials across the region are reaching new lows after another sell-off in developed markets and the US dollar is also not improving the outlook for CEE FX. In a nutshell, the picture is mixed and it is hard to find a way out. In our view at the moment, the Polish zloty has the best chance of erasing this week's losses thanks to its long-term squeezed positioning, and could return below 4.740 EUR/PLN for now. The forint could also see some gains today, but a deterioration in the rating outlook will bring the EU money theme and the negative market sentiment of the previous days back into play in our view. The Czech koruna should continue to maintain the intervention band 24.60-70 EUR/CZK and we do not expect it to break out of these levels at least until the Czech National Bank meeting next week. Frantisek Taborsky Read this article on THINK Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
FX: Historic Bank's Of Japan Forex Intervention Supported USD/JPY Downward Move!

FX: Historic Bank's Of Japan Forex Intervention Supported USD/JPY Downward Move!

Jing Ren Jing Ren 23.09.2022 08:22
In this article: USD/JPY USD/CHF GBP/USD USDJPY pulls back for support The Japanese yen skyrocketed following the first Japanese currency intervention in 24 years. The pair swiftly reversed its course after flirting with the psychological level of 145.00. A break below 143.50 triggered a liquidation of leveraged positions. 140.50 along the 30-day moving average is a key level to probe buyers’ interest. A bounce would signal that the greenback is merely taking a breather and the uptrend remains intact in the medium-term. A rally back above 145.00 may carry the price to August 1998’ high at 147.50. Read next: Cryptocurrency: Bitcoin Up, Ethereum Price Found Support, Ripple Price (XRP) Jumped! | FXMAG.COM USDCHF tests key resistance The Swiss franc fell after the SNB's hike came short of the 100bp previously priced in. A clean cut above the support-turned-resistance at 0.9690 is a sign of strong interest. The double top at 0.9870 is a major hurdle after the pair went into a four-month long consolidation. Its breach would help the dollar reclaim parity and open the door to the previous ceiling at 1.0050, a step closer to a bullish continuation. In the meantime, the RSI’s overbought condition might cause a limited retracement and 0.9740 would be the first support. GBPUSD takes a breather The pound slipped as the BoE raised its interest rate by a moderate 0.5%. The bearish inertia has taken a front seat after Sterling slipped through March 2020’s lows (1.1420). The RSI’s repeated oversold situations have led to a brief pullback. The former demand zone around 1.1460 has become a supply zone where the bears could be expected to get in at a better price. Sentiment may only turn around if the bulls manage to push past 1.1700, which means that the path of least resistance seems to be towards 1.1100 for now.
For What It Is Worthy To Pay Attention Next Week 23.01-29.01

Further Volatility Expansion On Market Is Expected

Saxo Bank Saxo Bank 23.09.2022 14:09
Summary:  The US dollar is following up on its initial strengthening move in reaction to the FOMC meeting on Wednesday after a more than a bit of chaotic intervention noise from Bank of Japan intervention yesterday. The important coincident indicator is the fresh surge in US longer treasury yields to new cycle highs. The correlation of moves across markets as risk sentiment deteriorates on this latest wave of higher USD and higher yields could see further volatility expansion. FX Trading focus: USD pulls higher still. Market ready to challenge the BoJ again soon? The USD has pulled higher still this morning, setting new cycle lows for EURUSD, GBPUSD and in other USD pairs, though with the notable absence of the USDJPY on the list as the market respects the risk of Bank of Japan intervention, at least at the margin. Still, the directional sympathy in USDJPY to the USD direction elsewhere has been in evidence since the pair bottomed below 142.00 overnight, trading above 143.00 as of this writing. More importantly, the massive surge in US long treasury yields to new cycle- and 11-year highs are piling on the pressure for the Bank of Japan to change its policy. US treasuries are the dominant driver across markets. Chart: USDJPYThe USDJPY situation played out largely as one might have anticipated after the FOMC took US yields higher and the Bank of Japan continued to take a stand on its currency policy and then made good on its intervention threats shortly after USDJPY breached 145.00 to the upside, taking the pair all the way back below 141.00 at one point before the price action stabilized. Now, the upside pressure has ratcheted significantly higher for the pair as the key coincident indicator for USDJPY historically, a longer-dated US treasury yield like the 10-year benchmark, surged yesterday by nearly 20 basis points. Without the BoJ’s presence and threats, we would likely be well on our way to 150.00. How long can the market stand to sit back before challenging the BoJ once again? It doesn’t seem a war the latter can win as long as Kuroda and company insist on staying pat with the current policy of freezing yields out to 10 years as US treasury yields march ever higher… Plenty of danger for market participants wanting to make that challenge, however, as the BoJ/MoF have shown tremendous determination in the past, at least when intervening against JPY strength as in 2003. Interesting reactions to two of the other central bank meeting yesterday, as the Bank of England merely hiked 50 basis points as the majority expected, but after a lean had developed in favour of a larger move, given the Riksbank and Fed hikes of larger magnitude this week. Ahead of the decision, the GBPUSD price action got caught up in the Bank of Japan intervention, but sterling trades relatively calmly despite the BoE’s decision if we have a look at EURGBP, as the BoE’s guidance for beyond this meeting was sufficiently hawkish to shift short UK yields sharply higher, likely in part on the plans to forge ahead with QT with plans to sell GBP 80 billion of holdings even as it surmised that the UK economy may already be in recession. GBPUSD reached remarkable new lows below 1.1200 this morning, while EURGBP is still sticky in the range. The flash Sep. UK Services PMI edged into contraction at 49.2 after 50.9 in August. A bit more drama yesterday around the SNB decision, where many were rushing to price in an exceptionally large hike, given the quarterly meeting schedule of the SNB. Alas, the SNB only hiked 75 basis points and made cryptic comments about intervening in either direction, shocking the CHF lower after EURCHF had traded to new lows as it gave the impression of a bit of pushback against the SNB using the currency as forcefully as a part of its inflation-fighting  arsenal. USDCHF positively soared. Could the SNB have some concerns about competitiveness of Swiss exporters? Regardless, the choppy EURCHF chart suggests that downside progress, if it continues, won’t be easy any more. The Norges Bank meeting yesterday was a spectacle, as the bank hiked the 50 basis points expected, but forecast that further rate tightening may soon end. Certainly out of touch with other CB signaling, and just look at NOK drop against the US dollar, hitting 10.50 today after trading sub-9.00 as recently as May! Looking ahead, we don’t have an awful lot on the US data calendar next week until the Friday August PCE inflation data, but we do have 2-yr, 5-yr and 7-yr treasury auctions set for Tue-Thu. As long as US treasury yields at 10-years continue posting new highs, that market will remain a key driver of sentiment, though it often (as in 1987 crash) in an extreme market volatility event suddenly changes character and attracts buying as a relative liquidity safe haven. Be careful out there. Table: FX Board of G10 and CNH trend evolution and strength.The former euro strength has decelerated, the CHF strength has decelerated even more post-SNB and the NZD and Scandies are the real weaklings of the lot. Gold playing the resilience card with all of this risk-off – stay tuned there. Table: FX Board Trend Scoreboard for individual pairs.The JPY crosses showing signs of trying to trend negative, but impossible to trust given the intervention backdrop and sovereign yields providing offsetting pressure. While the broader CNH strength picture remains a non-event, note USDCNH trading with a percent of the massive 2019-2020 top near 7.20 today and USDCNH trend reading at 10! USDCHF flipping up to a positive trend post-SNB was also an interesting one – can the pair threaten parity again? Upcoming Economic Calendar Highlights 1230 - Canada Jul. Retail Sales 1345 – US Flash Sep. S&P Global Manufacturing and Services PMI 1800 - US Fed Chair Powell to speak at event   Source: https://www.home.saxo/content/articles/forex/fx-update-spiking-long-us-treasury-yields-driving-riskoff-and-usd-meltup-23092022
Forex: USD/JPY Is Expected To Reach 145 In The End Of The Year. Why Is That?

The Intervention Series Will Not Be Able To Change The Downward Trend Of The Japanese Currency

InstaForex Analysis InstaForex Analysis 23.09.2022 14:11
Yesterday was supposed to be black Thursday for the yen, but everything turned out differently. The currency intervention carried out by Japan broke off the Napoleonic plans of USD/JPY. But for how long? Chronicle of the rise of USD/JPY The dollar-yen pair was finally able to break through the key 145 mark on Thursday morning, which it has already unsuccessfully stormed twice this month. The springboard for the asset was the divergence in the monetary policy of the Federal Reserve and the Bank of Japan. This week, the gap in US and Japanese interest rates has widened again. Recall that on Wednesday evening, the US central bank raised the indicator by 75 bps and hinted at more significant steps in the future. A few hours later, the Japanese central bank made a statement. As expected by the market, it announced the continuation of an ultra-soft policy and keeping rates at an extremely low level. The scenario assuming further growth of monetary divergence acted as a powerful impulse for the USD/JPY pair. In just a couple of hours, the dollar soared against the yen by more than 0.5%. The last jump of the greenback led the USD/JPY asset to another record. Since January, the greenback has strengthened against its Japanese counterpart by 25%. There has not been such an annual growth in the entire history of observations. However, the Japanese government did not put up with this and pulled the trigger. The currency intervention changed the whole picture overnight. Dramatic U-turn Japan's intervention cannot be called a "black swan". Many analysts prepared traders for this ahead of time and even named a specific moment when an intervention might occur. The 145 level really turned out to be the red line. As predicted, Japanese politicians did not allow the yen to fall below this mark. Japan's first market intervention since 1998, aimed at raising the rate of the JPY, stopped the rapid decline of the currency. Immediately after the intervention, the dollar-yen pair plummeted by more than 500 points, or 2.6%. Yesterday's low was the 140.35 mark. This morning, the Japanese yen is trading around 142 and is on track for its first weekly gain in more than a month. However, many analysts believe that it will not be easy for the Japanese currency to gain a foothold at current levels now, when the negative fundamental background prevails. To keep the JPY rate below 145, the Japanese government will most likely have to conduct more than one intervention. The risk that the authorities may intervene again is quite high. As the second largest foreign exchange reserve in the world, the BOJ has sufficient reserves to continue supporting the yen. At the end of August, Japan's reserves exceeded $1.17 trillion, while the average daily trading volume of the national currency in Tokyo was about $479 billion. According to economists, this reserve is large enough for the BOJ to strengthen the yen until the end of the Fed's policy tightening cycle, which should come by mid-2023. Put aside the panic Of course, the significant foreign exchange reserve that Japan can use to support the yen scares traders who are playing bullish in the USD/JPY pair. However, most analysts believe that there is no reason to panic. Even a series of interventions will not be able to change the downward trend in the Japanese currency. For the steady growth of the JPY, first of all, positive fundamental factors are needed, and there are none. The main obstacle on the yen's way up is the growing divergence in the monetary policy of the BOJ and the US central bank. The Japanese currency will remain under strong pressure until the BOJ retreats from its dovish position or the Fed begins to wind down the tightening of the monetary policy. The growing monetary divergence will eventually outweigh any intervention, Rabobank analysts are certain. Despite the risk of further interventions, they maintain their medium-term forecast for the USD/JPY pair at the level of 147. And many colleagues agree with them. According to analysts, purchases of the yen by the BOJ will be perceived by the dollar-yen asset as mosquito bites: it will be a bit of a shame, but it will pass quite quickly.   Relevance up to 10:00 2022-09-28 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. Read more: https://www.instaforex.eu/forex_analysis/322513
USD/JPY Reaching 130-135? It Seems It Maybe Not Impossible

USD/JPY Reaching 130-135? It Seems It Maybe Not Impossible

Conotoxia Comments Conotoxia Comments 23.09.2022 15:54
The Japanese government has decided to intervene with currency intervention in the Japanese yen market after the USD/JPY exchange rate approached the 146.00 level following an earlier Fed decision. The Japanese currency had been losing steadily since the beginning of the year with the divergence in the actions of the US and Japanese central banks. Bank's Of Japan Intervention The Japanese government and the Bank of Japan (BoJ) intervened on Thursday in the foreign exchange market for the first time since 1998, when the U.S. dollar reached a 24-year peak against the yen. Japanese Deputy Finance Minister for International Affairs Masato Kanda confirmed that the government responded by selling dollars against yen. Kanda added that "markets are making very volatile moves" and that Japan "cannot tolerate excessive volatility and disorderly currency movements." Earlier in the day, the BoJ decided to leave its interest rate unchanged and continue its loose monetary policy, BBN reported. Source: Conotoxia MT5, USD/JPY, H1 How lasting could the effects of intervention on the JPY be? For the time being, investors may be wondering how lasting the effects of Japan's, for the time being, one-time intervention in the currency market may be. The drop from around JPY 146.00 to JPY 140.50 may undoubtedly be impressive, but will it be able to halt USD appreciation, which may be driven by growing expectations of rate hikes in the US? Read next: Jim Cramer Comments On Inflation, IMF (International Monetary Funds) Talks Stablecoins | FXMAG.COM According to analysts quoted by Bloomberg, the Japanese yen could rebound to 130-135 per dollar if the authorities push ahead with more interventions in the foreign exchange market. The scale of intervention was still small relative to total foreign exchange reserves, so there is still some ammunition to defend the currency." - Saktiandi Supaat, regional head of foreign exchange market research, told Bloomberg TV. He notes that USD/JPY could head toward JPY130 or JPY135 if authorities push harder for further intervention. However, the baseline scenario assumes support for the dollar through the end of the year and perhaps into the first quarter of 2023. The dollar could weaken in the event of any signs of a Fed slowdown or positive developments around Russia/Ukraine, which could lead to a reduction in risk-off sentiment, the Bloomberg interview added. USD/JPY technical situation From the point of view of the USD/JPY exchange rate chart, we can see that the quotes are still inside a potential expanding wedge formation. In addition, the potential resistance level and the contractual limit for currency interventions at JPY 145.00 may also have been defended. The short-term line drawn after the lows was also broken. As a result, the rate could start consolidating in the range of JPY 145.00 to 141.50. Further potential support could fall in the area of previous peaks at JPY 139.00, and then at the lower boundary in the wedge. Source: Conotoxia MT5, USD/JPY, D1 Daniel Kostecki, Director of the Polish branch of Conotoxia Ltd. (Conotoxia investment service) Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
Inflation In Japan Continues To Show An Uptrend, The USD/JPY Pair Is Going Down

The USD/JPY Pair Has No Support For The Development Of The Downward Movement

InstaForex Analysis InstaForex Analysis 26.09.2022 08:06
In the face of Friday's growth of the dollar index by 1.56%, the USD/JPY pair added 0.68% (100 points). We do not think that the Bank of Japan will stop protecting the 145 level after the first intervention on the 22nd, so we expect a slowdown in the fall of European currencies and a reversal in the USD/JPY pair to the nearest support at 141.25, determined by the embedded price channel line of the higher timeframe. The MACD indicator line approaches this line, strengthening it. The Marlin Oscillator on the daily chart is declining in its own narrow channel. The price lacks its support for the development of a downward movement. Such support will appear when the signal line of the oscillator goes into the negative area. The price went above the MACD line on the four-hour chart, above the balance line, and the Marlin Oscillator moved into the area of positive values. Formally, this is a continuation of short-term growth. Let's see how short-term this growth will be. After consolidating under the MACD line (143.55), we are waiting for a new wave of decline in the currency pair. Aim for 141.25.   Relevance up to 04:00 2022-09-27 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/322594
ECB's Knot: July Rate Hike Necessary, Beyond July Uncertain; Canadian CPI Supports Rates on Hold; Global Crypto Market at $1.2 Trillion; Oil Market Tightens with Russian Shipments Drop and China's Support Measures

The Actions Of The Fed And The Bank Of Japan Are Drowning The Japanese Currency (JPY)

InstaForex Analysis InstaForex Analysis 26.09.2022 12:22
The dollar burst on horseback in the new working week, and the USD/JPY pair regained strength. The asset jumped by more than 0.3% at the beginning of Monday and broke through the resistance at 144. The dollar broke loose Recall that last week the dollar-yen pair tickled the nerves of traders more than once, getting into a zone of increased turbulence. First, on the increased monetary divergence between the US and Japan, the asset managed to reach a new 24-year high at 145. And then, as a result of the currency intervention carried out by Japan in support of its national currency, the quote sharply collapsed from this peak by more than 500 points. The intervention of the Japanese authorities helped JPY to complete the last seven days in a slight positive. This was the first weekly growth of the yen in a month. However, as analysts predicted, the effect of unilateral intervention was short-lived. The USD/JPY pair started the new working week with a steady growth. During the Asian session, the Japanese currency fell again against its US counterpart below the 144 mark. The pressure on the JPY was exerted by a large-scale rally of the dollar. On Monday morning, the greenback reached another high against the euro and the pound. Thus, the euro fell against the dollar by 0.4%, to $0.9654, as the Democrats lost to the far-right party in the parliamentary elections in Italy. Such an outcome opens the way to the political restructuring of the EU. Meanwhile, the British pound fell in price against the dollar by 2.8%, to a record low of $1.0555. Fears of an even greater increase in inflation if the government implements a plan to reduce taxes contributed to the pound's fall. At the time of release, the dollar strengthened on almost all fronts, as a result of which the DXY index soared by more than 0.5%, to a new 20-year peak at 114.58. Why is the demand for USD growing? The strong jump in the US currency was caused by an increase in anti-risk sentiment and an increase in the yield of 10-year US Treasury bonds. World stock markets are falling now for two main reasons. The first is another escalation of the conflict between Russia and the West. This time, relations have worsened amid referendums held by the Kremlin in the Luhansk and Donetsk People's Republics, as well as in the Kherson and Zaporozhye regions of Ukraine. Moscow has promised to take these regions under full protection if they become part of Russia. Western politicians regarded this as a direct threat of the use of nuclear weapons. Also, the growth of fears about the global recession contributes to a decrease in risk appetite. The wave of rate hikes observed last week significantly worsened forecasts for global economic growth. As major central banks continue to raise rates, their economies are noticeably weaker. The only exception is the US. Despite the fact that the Fed is at the forefront of tightening monetary policy, the American economy is still firmly on its feet. This is evidenced by the latest US macro data published on Friday. A report from S&P Global showed that in September, the index of business activity in the manufacturing sector of America rose from 51.5 to 51.8, while its counterpart in the service sector recovered from 44.6 to 49.3. Positive statistics helped to strengthen expectations of a more aggressive Fed policy, especially since at the end of the week, officials of the US central bank intensified their hawkish rhetoric. On Friday, Fed Chairman Jerome Powell said that the central bank is determined to continue actively fighting inflation. The comments of Fed Vice Chairman Lael Brainard and Atlanta Fed President Rafael Bostic were in the same spirit. Hawkish speeches by politicians helped to disperse the yield of 10-year US Treasury bonds to 3.74%, which inspired the dollar to a new record. You can't envy the yen The aggressive position of the US central bank in relation to interest rates is what is now drowning the Japanese currency. Despite the recently thrown lifeline in the form of intervention, the yen is increasingly sinking to the bottom and risks approaching the red line again – the 145 mark. An additional ballast that does not allow the JPY to go up is the news about the next dovish actions of the Bank of Japan. On Monday morning, it became known that the BOJ again decided to increase the volume of bond purchases, as the benchmark yield of 10-year Japanese bonds jumped to the upper limit of the acceptable trading range of the central bank. Also, strong pressure on the JPY was exerted by the statement of the former chief currency diplomat of Japan, Naoyuki Shinohara. In an interview with Reuters, the official said that the government is unlikely to go for another large-scale intervention, so as not to draw fire from other G7 participants. – The most that the authorities can do now is to try to smooth out the volatility in the foreign exchange market with small purchases of the yen, but this will clearly not be enough to reverse the downward trend, – he stressed. Nevertheless, traders playing bullish for the USD/JPY pair should be on their guard. Some analysts do not rule out that the Japanese authorities may again intervene, which will cause a short-term rebound of the quote. This is evidenced by today's comments by Japanese Finance Minister Shunichi Suzuki. On Monday morning, the politician issued another warning: "We are deeply concerned about the recent rapid decline of the yen, partly caused by speculative trading, and our position of readiness to respond to such steps as necessary has not changed," he said. The increased risk of intervention may become a minor obstacle for bulls on the dollar-yen pair in the short term. However, most analysts believe that this week the asset will still move mainly in the upward direction. In the coming days, the dollar may receive several more powerful impulses for growth, as a number of speeches by Fed representatives are expected throughout the week. According to experts, American politicians will continue to bend the hawkish line, which will further add fuel to the fire of monetary divergence between the United States and Japan. This will favor the dollar's growth, as a result of which the USD/JPY pair can demonstrate another record.   Relevance up to 09:00 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. Read more: https://www.instaforex.eu/forex_analysis/322630
EM Index Inclusions and Exclusions: India Thrives, Egypt Faces Challenges

Chaos And Rising Volatility Are Present In Market Mood

Swissquote Bank Swissquote Bank 27.09.2022 09:52
We had a bearish start to the week on Monday and the price action across several asset classes remains volatile and chaotic - and that’s especially true for the FX markets shaken by the freefall in sterling. FX Market The US dollar remains king, on the back of a heavy sterling meltdown due to irresponsible UK government / lazy Bank of England (BoE), and euro selloff on the back of Italy turning right / cautious European Central Bank. The USDJPY spiked at yesterday’s dollar rally, as if the Bank of Japan (BoJ) never intervened last week. The BoJ head says that he supports intervention in the yen. In vain. Stock Martet  Equities selloff, as investors expect a deeper downside move due to pressured earnings. Tech stocks remain on the chopping block. To reverse sentiment, Amazon throws the second Prime Day sale this year, and Apple hurries out of China. While outlook for equities remains bearish, the rising yields make sovereign markets increasingly appetizing, and an eventual inflows in global sovereign markets could be the first sign of healing from the actual financial crisis. Watch the full episode to find out more! 0:00 Intro 0:27 Bailey is clearly not a good 'adult' in the room… 4:26 Where is the money, and where could it go next? 5:53 Stock mood update 8:20 FX talk Ipek Ozkardeskaya Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #GBP #EUR #selloff #UK #mini #budget #USD #rally #Apple #Amazon #Google #Netflix #UK #gilt #sovereign #bonds #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary ___ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr ___ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 ___ Let's stay connected: LinkedIn: https://swq.ch/cH
Bank of England survey highlights easing price pressures

The Trend Of The Pound (GBP) And The Actions Of The Bank Of England (BoE) Have A Strong Correlation

InstaForex Analysis InstaForex Analysis 27.09.2022 10:42
Pound tumbled to a record low on Monday due to concerns over the stability of the UK's financial position. It followed a strong decline last Friday, which occurred because of the widespread demand for the dollar in the context of the global crisis and geopolitical tensions, as well as the new UK Treasury Chief Kwasi Kwarteng's announcement that the government will implement the biggest tax cut in 50 years while increasing government borrowing and spending despite high inflation. The measures have raised expectations that the Bank of England may go for an emergency increase in the discount rate to strengthen market confidence and the national currency. In addition to the problems mentioned above, the UK is facing weak economic statistics. Business activity in the manufacturing sector reportedly fell below 50 points, which is bad for the economy. If the situation does not change, the pound will fall to parity with the dollar. Perhaps, there may be a local rebound in GBP/USD, but the main trend will be downward until the Bank of England decides on a sharp increase in rates. Forecasts for today: USD/CAD The pair is trading below the support level of 1.3675. A decrease in negative sentiment, local rebound in stock indices and strong rise in oil prices may prompt a further fall to 1.3575. USD/JPY The pair faced resistance at 144.80. But if market sentiment improves, it will bounce back to 143.15.   Relevance up to 08:00 2022-09-29 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/322744
UK Monetary Policy Outlook: A September Hike Likely, but November Uncertain

Intervention In The Yen (JPY) Still Remains A Far Cry| The Pound (GBP) Is The Weakest Against The Dollar (USD)

InstaForex Analysis InstaForex Analysis 27.09.2022 11:04
Summary:  Havoc has spread to the markets, not just with the Fed staying the hawkish course, but with the collapse in confidence in the UK economy after a fiscal policy and lack of monetary policy response adding into the mix with a massive bond selloff. Meanwhile, the surge in the US dollar continued taking its toll on several currencies, and the effect of Japan’s intervention from last week has also faded. Earnings pressure may be the next shoe to drop, and recession concerns also still need to be priced in more broadly. Fed’s high-for-longer message is now being taken seriously The September FOMC meeting was not precisely a pivot point for the Fed, but more so for the markets which finally understood the Fed’s message on inflation. The dot plot, particularly, conveyed two key messages as listed below. Even though the accuracy of the dot plot remains in doubt, given a very weak correlation with what actually transpired previously, it is a great signalling tool to understand the intentions of the FOMC members. Terminal rate is seen at ~4.6%, which was above what Fed funds futures were pricing in before the meeting. Even slower growth and higher unemployment levels, as conveyed by the Fed’s projections, would not deter the central bank from hiking rates There was some pushback on premature easing, with the dot plot showing a 4.5-5.0% rate even at the end of December 2023. Alongside that commitment to tighten, the Fed is now at the full pace of its quantitative tightening program, which is sucking liquidity out of financial markets at a rapid pace. The aim is to shrink the Fed’s balance sheet by $95bn a month — double the August pace. While quantitative tightening strongly influences liquidity conditions and asset markets, it is less useful in directly impacting inflation. While systemic risks from QT may remain contained, it ramps up the rise in Treasury yields as the Fed’s balance sheet shrinks and the amount of Treasuries in private hands increases. Trussonomics pushing UK to an emerging market status Sterling has fallen close to 10% on a trade-weighted basis in a little under two months, and has surpassed the Japanese yen to be the weakest against the US dollar year-to-date. An immediate response from the Bank of England may have saved some face, but remember that last week’s BOE decision was a pretty split vote as well with two members voting for 75bps rate hike and one calling for a smaller 25bps rate hike as well. So, it remains hard to expect a prudent policy response from the BOE, and a parity for GBPUSD in that case may not prove to be the floor. UK’s net forex reserves of $100bn are also enough to only cover two months of imports, or roughly equal to 3% of GDP as compared to Japan’s 20% and Switzerland’s 115%. But it’s not just about the sterling crisis in the UK, but more generally a crisis of confidence. Not to forget, inflation forecasts for end of the year are already at 10%+ levels and the market is now pricing in over 200bps of rate hikes by the end of the year, with two meetings left. The central bank will need to deliver this massive tightening simply to keep the sterling where it currently is and that won’t reverse the impact of the government’s decisions on UK markets. The scale and speed of the hikes could also do significant damage to the economy. The iShares MSCI United Kingdom ETF (EWU:arcx) traded lower by another 1.8% on Monday and is now down 7.3% over the last one week. Bank of Japan’s patience will keep getting tested We wrote earlier about what will need to change to call it a top in the US dollar, and nothing seems to be in order yet except some of the non-US officials starting to get concerned about currency weakness. Still, the intervention from Bank of Japan didn’t have long lasting effects on USDJPY, even as it helped to strengthen the yen against some of the other currencies such as the EUR, GBP or AUD. It may have also helped to stop some speculative shorts. But a coordinated intervention in the yen still remains a far cry, with the weakness in the Japanese yen being BoJ's own-doing due to the yield curve control policy. Japanese government bonds will likely continue to test the patience of Bank of Japan with its yield curve control policy. Downside for Japanese government bonds (JGB1c1) will potentially spike exponentially if the BOJ pivots at some point. Earnings pressure may be next While the Q2 earnings season proved to be more resilient than expectations, intensifying inflation concerns have turned corporates more cautious on the outlook and less optimistic for the near-term earnings performances. We have seen some downward revision of EPS estimates for the third quarter in July and August, and we still cannot rule out further grim outlook and margin pressures. Estimates for S&P 500 earnings in 2022 stood at $226.15 per share as of August 31, according to FactSet. This is down 1.5% from the $229.60 per share estimate as of June 30. For 2023, analysts now expect EPS of $243.68, down 2.8% from the June estimate of $250.61. So far, companies dealt with rising inflation by passing on increased costs to consumers, given the pandemic-era fiscal support measures underpinned strength in the consumer side. These increased pass-through was also visible in higher CPI prints. But with the economic outlook getting duller by the day, there is bound to be some pushback from the consumers and that will likely show up in the earnings report card. From a sectoral perspective, tech stocks will likely be battered as tight corporate budgets weigh and the US 10-year yields are in close sights of 4%. Semiconductors, a barometer of global economic health, could also face further pressure. Meanwhile, the oil and gas sector was the saviour of the Q2 earnings season, but would also likely see some pressure in Q3, unless the outlook starts to look slightly more upbeat with improving capex plans. Dollar pivot is the next key catalyst to watch The majority of the market downfall we have seen so far has come from a rapid shift in cost of capital and correcting peak valuation. The next leg, as discussed above could be the earnings recession. Still, economic recession risks remain and history suggests that the market lows do not come until after the recession begins (see chart below). Still, with the US 10-year yields approaching 4% - which maybe a likely ceiling – the focus turns to a reversal in the US dollar as the next pivot, not the Fed. Testing those key levels could mean a short-term bounce in equities which may be favourable for building new short positions as the trend still remains down. Alternatively, for investors, it would rather be optimal to look for signs of selling exhaustion to accumulate long positions, such as VIX above 40. Historically, a decline in stocks of the order of 20% makes it buying stocks after they have been down 20% from record highs has been a good risk/reward proposition for longer-term investors.     Source: https://www.home.saxo/content/articles/macro/macro-insights-approaching-a-breaking-point-but-not-without-more-pain-first-27092022
The Loonie Pair (USD/CAD) Takes Clues From The Downbeat Oil Prices

Sell-off In Oil Prices Added To The Pressure On Canadian Dollar (CAD)

Saxo Bank Saxo Bank 27.09.2022 13:25
Summary:  The Bank of England’s response to the downdraft in sterling since late last week was rather lacking, as the bank merely indicated it will address the situation at the next regularly scheduled meeting. They may not have that luxury unless this brightening of global risk sentiment that has materialized overnight has legs. Elsewhere, traders continue to steer clear of challenging Japan’s Ministry of Finance on intervention despite a fresh surge in US treasury yields yesterday. FX Trading focus: Bank of England response to sterling crisis rather muted, but a broad sentiment shift might keep them off the hook near term. The Bank of England’s response yesterday to the enormous downdraft in sterling was not as dramatic as those looking for a kneejerk hike this week might have expected. The Bank issued a short statement, which merely indicated that it is aware of what the government is doing and will take that and sterling’s moves into consideration at the next regularly scheduled meeting on November 3. Perhaps the phrase that it “will not hesitate to change interest rates by as much as needed to return inflation to the 2% target” that saved sterling from a further pounding just yet. There are two ways to look at this: the BoE doesn’t want to be seen as panicking and jerked around by market developments. On the other hand, it would have been more hawkish to avoid mention of the next regularly scheduled meeting to suggest that we might infer a rate hike is possible at any time if the sterling volatility worsens again. In support of sterling, the overall rate expectation for the November 3 meeting remains pinned just below 150 basis points this morning, a very large rate hike indeed when your policy rate is 2.25%. We may not have seen the cycle low in sterling, but in the nearest term, a rally in risk sentiment can keep sterling in consolidation mode tactically after the trauma of the last couple of sessions. Chart: USDCADRemarkable to see USDCAD extending the rally yesterday at an even more rapid pace than the one established over the last couple of weeks, the kind of price action one often associates with at least a temporary climax in the trend. A fresh sell-off in oil prices added to the pressure on CAD and NOK as well. But that trend has extended so far and so quickly that the USDCAD pair can easily retrace to 1.3500 without meaningfully softening the up-surge, and today’s price action suggesting we may avoid a correction even to that level. Since the early 2000’s, USDCAD has only traded above yesterday’s 1.3800+ highs on two occasions – for a couple of months when oil collapsed during the pandemic outbreak in the spring of 2020 and during a short episode during the USD peak of late 2015/early 2016. The coming recession may prove more vicious in Canada relative to the US, given very elevated private debt levels in Canada, much of it associated with housing. Mortgage financing is generally 25 year mortgages that roll every 5 years. That 5-year mortgage rate has risen to levels similar to the US 30-year rate around/above 6%. In the US, the vast majority of mortgages are 30-year fixed, meaning no real impact for most homeowners who are staying put with existing mortgages, but a far faster and greater impact on Canadian mortgage holders who must roll to the new and suddenly vastly higher rates. As discussed in this morning’s Saxo Market Call podcast, it will be very interesting to watch the evolution in the US Consumer Confidence survey of the spread between the Present Situation and Expectations components, which reached their lowest levels since 2001 in July. The latest September survey is up today. Typically this spread bottoms out and is rising quickly as the US economy is tilting into recession. As this survey is historically closely correlated with the labor market, any rise in the spread would likely be preceded by a couple of months of clearly rising jobless claims. On that front, we hit record lows in claims (adj. for population) back in March, followed by a significant surge into July. Since then, the lower claims suggest a still-strong labor market, but another turn and rise above a 250k weekly run puts us on a countdown toward a recession and peak Fed tightening expectations. We are likely at an inflection point in Q4 as the real wear on the economy from policy tightening is picking up pace, given the 9-12 month lag of policy, which may be more compressed this time given the vicious pace of the tightening once it got underway. It’s remarkable to recall that the Fed only achieved lift-off from effective zero in March, with treasury yields beginning to surge, however, already in late 2021 and accelerating higher in January. Table: FX Board of G10 and CNH trend evolution and strength.Nothing much new here, but the readings are extreme in USD strength and GBP weakness, while development around the edges are interesting, including whether the broad JPY bounceback can hold and the degree of relative weakness in CNH as the key 7.20 level approaches in USDCNH and the jockeying amongst the G-10 smalls. Table: FX Board Trend Scoreboard for individual pairs.NOKSEK is pressing on a major level at 1.0500 as cratering oil prices and crazy messaging from the Norges Bank have NOK under pressure – crazy volatility in today’s session, by the way. Elsewhere, note the pump and reversal in AUDNZD – was that at least a temporary top for now there? Upcoming Economic Calendar Highlights 1100 – UK Bank of England Chief Economist Pill to speak 1100 – ECB's Villeroy to speak 1130 – Fed Chair Powell to speak on digital currencies 1230 – US Aug. Preliminary Durable Goods Orders  1300 – US Jul. S&P CoreLogic Home Prices 1355 – US Fed’s Bullard (voter 2022) to speak 1400 – US Sep. Consumer Confidence 1400 – US Aug. New Home Sales 1700 – US 5-year Treasury Auction 1700 – US Fed’s Kashkari (voter 2023) to speak 2350 – Japan Bank of Japan meeting minutes 0130 – Australia Aug. Retail Sales    Source: https://www.home.saxo/content/articles/forex/fx-update-boe-response-rather-muted-but-big-hikes-still-baked-in-27092022
UK GDP Already Falling And Continuing To Do So For This Calendar Year, Copper Is Still Within A Tightening Range

British Pound (GBP) Hasn't Been Significantly Supported So Far, What Do We Know About The Potential Move Of BoE?

Craig Erlam Craig Erlam 27.09.2022 14:37
Bank Of England "Ready To Act" Stock markets have steadied in Asia and early European trade on Tuesday but that is not reflective of the mood in the markets at the moment so it may struggle to hold. The volatility in FX markets at the start of the week has been extreme but it’s also been building for weeks as authorities desperately try to arrest the decline in their currencies, particularly against the US dollar. On Monday it was the UK that was front and centre following the mini-budget on Friday that showed total disregard for the environment in which it was being implemented. Promising much higher borrowing to fund huge tax cuts at a time of double-digit inflation that hasn’t even peaked is beyond bold and the backlash is well underway. There’s nothing wrong with being ambitious on the economy but timing is everything and when the cost is much higher interest rates, there won’t be many winners and the economy simply won’t see the benefit. The question now is whether the pressure both externally and from within will force a rethink in order to settle things down. Read next: The Weakening Real Estate Market In The USA And More Speeches| FXMAG.COM The Bank of England did little to help. After speculation all day of an impending announcement, the central bank only sought to reassure markets that they stand ready to act but probably not until the next meeting in early November when it is armed with new macroeconomic projections. Needless to say, that reassured no one and sterling plummeted again after recovering amid the rumours of the announcement. BoJ intervenes amid rising yields It’s not just the UK that’s contending with a haemorrhaging currency, the Japanese Ministry of Finance was forced to intervene last week for the first time in 24 years in order to support the yen. Of course, while the UK’s problems appear largely self-inflicted, Japan is suffering as a result of a growing rate divergence that is worsening month to month. So much so that the Bank of Japan was forced to intervene itself overnight with another bond-buying operation to the tune of 250 billion yen. The problem with yield curve control is that when yields are rising everywhere, pulling those in Japan with them, the upper limit is frequently tested necessitating intervention which in turn weakens the currency. It seems Japan is now stuck in an intervention doom loop until central banks elsewhere see peak inflation and therefore rates, or the BoJ loosens its grip and allows yields to move a little higher. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. More turmoil to come? - MarketPulseMarketPulse
The Run Higher In Japanese Yields Is Likely To Create Further Volatility In Global Markets

The Intervention Of The Bank Of Japan May Orove Futile (USD/JPY)

InstaForex Analysis InstaForex Analysis 28.09.2022 08:09
The yen's situation is unfolding in such a way that the Bank of Japan's intervention on September 22 to protect the level of 145.00 may turn out to be in vain. The price has already approached the resistance of 145.05, consolidating above which opens the 147.30 target – an embedded line of the global price channel. The Marlin Oscillator is still kept in the positive area. Obviously, the BOJ is not able to withstand the global strengthening of the dollar, although the yen has been staying at current levels for three weeks now. So, if there is no repeated intervention of the central bank close in volume to the last action (which is more likely), the pair will grow to 147.30. Support in the current situation is the embedded line of the price channel and the MACD indicator line approaching near the 141.28 mark. On the four-hour chart, the price is consolidating under the linear resistance of 145.05. Consolidation above the level will be the first sign of the price's determination to go to 147.30. The Marlin Oscillator is stable in the positive area, it managed to consolidate, probably for a breakthrough upwards.   Relevance up to 04:00 2022-09-29 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/322844
The French Housing Market Is More Resilient | The Chance Of Republicans Winning The Senate Is Up

Optimistic Forecasts Of The French Government|Three Officials Suggested That The US May Avoid A Recession

Saxo Bank Saxo Bank 28.09.2022 09:24
Summary:  Market sentiment tipped sharply lower late yesterday after an earlier rally attempt in the US session on the news of sabotage of the Nord Stream pipelines in the Baltic sea. Elsewhere, the US 10-year treasury benchmark rose again and is pushing on the major 4.00% level, taking the USD higher and pressuring global liquidity. Adding further to weak sentiment overnight, the Chinese yuan slipped sharply lower as USDCNH broke above its longer term range highs of 7.20 established back in 2019 and 2020.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) US equities jumped higher out of the gates in early trading yesterday, but the action faded all day and the market closed back near the key cycle support, with the S&P 500 index even posting a minor new bear market low intraday below the prior 3637 mark on the cash index, as the news of the Nord Stream pipeline sabotage (see below) weighed, and US yields and the US dollar continued their ascent. Pivotal levels here for equities as we await further developments and consider end-of-quarter flows into Friday. Hong Kong’s Hang Seng (HSIU2) and China’s CSI300 (03188:xhkg) Stocks traded in the Hong Kong bourse notably underperformed those in Shanghai and Shenzhen. Shares of public utilities fell from 3% to 5%.  U.K. headquartered HSBC (00005:xhkg) and Standard Chartered (02888:xhkg) continued their slide, falling 3% to 4% for the day and 9% to 11% since last Friday’s post-mini-budget turmoil in the Pound Sterling and U.K. Gilts.  Both Hong Kong and China developers plunged across the board,  mostly by 1% to 5%, with CIFI (00884:xhkg) falling over 27% and being the largest casualty in the property space.  CIFI, the 13th largest property developer in mainland China was said to have missed a payment on a project-related debt.  CSI300 fell 1%, dragged by ferrous metal, electric equipment and defence industries while banks, textiles, food and beverage stocks outperformed. Strong USD continues to rage. We have witnessed an historic move in the USD this month, with month-end and quarter-end drawing into view on Friday. Besides the massive, more than 8% meltdown in GBPUSD this month (trading sub-1.0700 this morning), a pair like AUDUSD has lost over 6.5% as of this morning’s exchange rate. The question soon has to be: when does this strong USD finally “break something” and bring an official response, whether coordinated or unilaterally from the Fed or the US Treasury? So far, there seems no sense of emergency, judging from comments yesterday by US National Economic Council director Brian Deese, who pushed back against the idea that the a Plaza Accord-like deal is under consideration. USDCNH reaches all-time highs, intensifying strong USD story. The strong US dollar finally took USDCNH above the 7.20 area that defined major tops on two prior occasions in 2019 and 2020. The exchange rate traded as high as 7.239 overnight, the highest in the history of the offshore CNH currency. USDCNY has not traded this high since early 2008. The move comes ahead of a major holiday next week in China, with markets closed for the entire week, which will leave markets in limbo next week as USDCNY won’t trade. Gold (XAUUSD) remain under pressure from the stronger US dollar and rising US treasury yields, perhaps showing resilience at the margin given that the precious metal failed to post new lows for the cycle yesterday or today even as the USD surges to new highs elsewhere. The next focus is perhaps the round 1,600 level if the selling continues. Crude oil (CLU2 & LCOV2) recovers, European natural gas surges. Crude oil shifted focus back on supply worries with curbs in the U.S. Gulf of Mexico ahead of Hurricane Ian and with reports that Russia is pushing for the OPEC+ alliance to cut production. The group of oil producing nations is due to meet early next month to discuss its production plans. They already announced a cut to output for October by 100kb/d and have warned of further reductions amid falling prices. There has been reports that Russia is pushing for a cut to output of at least 1mb/d. Meanwhile, a pause in USD rally also helped to put a floor to the declines in commodity prices. WTI futures rose but still remained below $80/barrel while Brent futures were above $86. US treasuries (TLT, IEF) US treasury yields rose once again after a brief and relatively sharp stumble yesterday, taking the 10-year yield to the symbolic 4.00% yield. It is worth noting that large round numbers on the yield often provide sticking points – for example, the 3.50% defined the top in June. Is this an important cycle top in yields or can they continue to power higher. The 4.00% level was also the stop for much of late 2008 and 2009. Yesterday saw a weak 5-year treasury auction despite the high yields. What is going on? Nord Stream pipelines severed, presumably an act of sabotage. Enormous upwellings of gas in the Baltic along the Nord Stream 1 and Nord Stream 2 pipelines in the Baltic Sea and detection of seismic activity that resembled explosions rather than earthquakes suggest that the pipelines were sabotaged to prevent the delivery of gas to Germany from Russia. The Nord Stream 2 pipeline was never operational, and the Nord Stream 1 deliveries had recently ceased. EU commissioner joined others in pointing the finger at Russia for the action, promising “the strongest possible response” if it is confirmed that Russia is behind the action. The development saw European natural gas jumping more than 22%, with Gazprom also issuing sanction warnings for Ukraine’s Naftogaz, which would prevent it from being able to pay transit fees, and therefore put at risk whatever little gas is still flowing to Europe via Ukraine. Fed officials continue with a united hawkish voice. While inflation and higher-for-longer interest rates remain a key theme in all Fed commentary these days, there is also another common theme emerging. All three officials on the wires yesterday – Kashkari, Bullard and Evans – suggested that the US may avoid a recession. Kashkari (2023 voter), in an interview with WSJ, said he’s unsure if the policy is tight enough suggesting more rate hikes will be needed to bring down inflation. Bullard (2022 voter) said the US has a serious inflation problem and the credibility of the inflation targeting regime is at risk. Evans (non-voter) is optimistic the terminal rate the Fed has set out (4.6% median in Dot Plot) will be restrictive enough. France releases ‘rosy’ economic forecasts for 2023. Yesterday, the French government published its economic forecast for 2022-23 as part of the parliamentary debate on the 2023 debate. The forecasts are overly optimistic. The Ministry of Finance expects that household investment (which mainly consists of the purchase and renovation of dwellings) will increase by 0.6 point over 2022-23 despite a jump of 250 basis points in the 10-year government bond yield and falling (or at best stagnant) purchasing power. We are a bit skeptical. We think that a sharp decrease in real estate prices is one of the less mentioned risks in France for 2023. This will be something to monitor very closely. It could seriously deepen the expected recession. USDJPY testing 145, but yen crosses lower. Bank of Japan released the meeting minutes from the July meeting, understandably stale, but continuing to signal that easing intentions remain prevalent. Despite a further run higher in US Treasury yields with the 10-year touching the 4% mark, USDJPY has still remained capped below 145. More importantly, the yen is stronger against the EUR, GBP and AUD since the intervention on 22 September, and the contrast with the struggling CNH is particularly notable. The World Bank downgraded its growth forecasts for China while upgrading the growth of Vietnam. The World Bank published its latest economic forecasts on Tuesday, cutting the 2022 growth rate of China to 2.8% from its previous forecast of 5%, and the 2023 growth rate to 4.5% from 4.8%.  On the other hand, the supra-national bank raised Vietnam’s growth rate in 2022 to 7.2% from the 5.3% forecast released in April. It also raised the 2022 growth forecasts for the Philippines to 6.5% from 5.7% and Malaysia to 6.4% from 5.5%. Excluding China, the East Asia, Pacific region is forecasted to grow 5.3% in 2022 and 6.0% in 2023, which will be, for the first time over the past three decades, higher than the growth rates in China. BHP takes advantage of sterling slump and redeems notes more than half a century early. Despite the iron ore (SCOA) price falling 1.4%, to its equal lowest level this year (US$95.90), BHP shares in Australia rallied to a three-day high after the mining giant paid off debts earlier than expected. BHP took advantage of the slump in the sterling against the USD, and used its record profits to redeem pound-denominated notes (due in 2077). This resulted in BHP effectively paying down $643 million of notes early. Last month BHP reported net debt of just $333 million. BHP also announced mining expansion plans. From exploring options to mine copper at Cerro Colorado beyond 2023, with Chilean regulation easing, to also seeing huge commodity upside in Peru, and spending $12m on exploration there over 10 months. Meanwhile, BHP also affirmed it’s working toward bringing forward production for its new potash (fertilizer) business to 2026. BOE Chief Economist Pill also pushed back on inter-meeting rate hike. Huw Pill said the UK’s government’s fiscal announcement and the market reaction that followed it requires a significant monetary policy response, but the best time to assess and react to their impact is at the institution’s next meeting in November. He acknowledged the challenge to the bank’s inflation goal arising from the loose fiscal policy, while also saying that the bank’s program of government bond sales should go ahead as planned next week if the market repricing stays orderly, as has been the case in recent days. However, it is worth noting that BOE’s November 3 meeting is still before the medium-term fiscal strategy is announced, and if that contains significant spending cuts, the budget may prove contractionary, especially given the rise in yields. US consumer confidence beats expectations. Lower petrol prices and a tight labor market possibly aided a rebound in sentiment, but high inflation and interest rates will continue to constrain consumer spending in the fourth quarter. Meanwhile, 1yr consumer inflation expectations declined to 6.8% (prev. 7.0%), but still remaining significantly higher than the Fed’s 2% goal. In other data, US durable goods order fell 0.2% in August, still coming in better than expected while new home sales rose to the strongest pace of sales since March to 685k in August, above the expected 500K and prior 532k (revised up from 511k). What are we watching next? End of quarter rebalancing? We have seen aggressive moves across markets this quarter, to say the least, which brings the question of whether significant rebalancing flows are set for the quarter end this Friday. The relative bond performance has been perhaps worse than that for equities, while in FX the focus may be on possible rebalancing after a tremendous USD upsurge in Q3. Earnings calendar this week The chief action this week is up tomorrow as H&M, Nike, and Micron Technology deliver earnings reports, with the earnings from Micron the most interesting to watch as we already know H&M and Nike are seeing weak demand. Micron has exposure to the consumer electronics industry and manufactures memory chips in Asia which means that the company sits in at the intersection of many interesting trends. Today: Paychex, Cintas Thursday: Polestar Automotive, H&M, Nike, Micron Technology, CarMax Friday: Carnival (postponed from last week), Nitori Economic calendar highlights for today (times GMT) 0715 – ECB President Lagarde to speak 0815 – UK BoE Deputy Governor Cunliffe to speak 0830 – ECB’s Holzmann to speak 1230 – US Aug. Pending Home Sales 1230 – US Aug. Advance Goods Trade Balance 1235 – US Fed’s Bostic (non-Voter) to speak 1400 – US Aug. Pending Home Sales 1410 – US Fed’s Bullard (voter 2022) to speak 1415 – US Fed Chair Powell to speak (opening remarks at conference) 1430 – US DoE Weekly Crude Oil and Product Inventories 1500 – US Fed’s Bowman (voter) to speak 1700 – US 7-year Treasury Auction 0000 – New Zealand Sep. ANZ Business Confidence survey   Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher   Source: https://www.home.saxo/content/articles/macro/market-quick-take-sep-28-2022-28092022
Market Sentiment and Fed Policy Uncertainty: Impact on August Performance

The Prospects Of Foreign Currencies Against The US Dollar (USD)

InstaForex Analysis InstaForex Analysis 28.09.2022 12:19
Hello, dear colleagues. The main event in September was an increase in the federal funds rate by 0.75%. Commenting on this decision, adopted unanimously, Federal Reserve Chairman Jerome Powell said that the US central bank is ready to continue raising rates until inflation starts to decline and the Committee receives data on the sustainability of the decline in inflation expectations. A few days later it became clear that the decision taken by the Open Market Committee could lead to serious, if not catastrophic, consequences for the entire global financial system and its most important element — the FOREX market. Before discussing the prospects of foreign currencies against the US dollar, let's discuss why a rate hike leads to a rise in the dollar and a decrease in the rates of its competitors? The answer to this question lies in one of the fundamental laws of the foreign exchange market — the Interest Rate Parity Theorem. The essence of the theorem is that assets with the same credit risk will be more attractive in the currency of the state where the rate is higher. In this case, investors will sell the currency with lower rates and buy the currency with higher rates in order to receive a large premium for their investment. Figure 1: The US dollar exchange rate against a basket of foreign currencies The increase in the dollar rate primarily hit currencies with low rates, including, first of all, the euro, the yen and the British pound, and this is the flip side of the US dollar. Moreover, if the yen and the pound have limited influence, then the euro is the second most important reserve currency in the world. The economic problems associated with rising energy prices have further aggravated the situation in the eurozone economy, and the slowness of the European Central Bank has led to the fact that the difference in interest rates has become large enough for a massive outflow of capital from Europe. This has become especially relevant for energy-dependent industries, such as metallurgical companies and aluminum production. At the same time, the situation in the British pound and the Japanese yen is no better than that of the euro, and even worse in some ways. The British pound updated the historical low on September 26. The yen updated the 30-year low a little earlier. There is another circumstance that puts pressure on exchange rates, this is the decline of the US stock market, which adds an additional growth driver to the dollar. Thus, the dollar is at the peak of its power in relation to the currencies of the bloc. The Chinese yuan is also under pressure, although much less than the nearest US satellites. This week, the yuan has updated the low and is now trading at 7.14 yuan per dollar, but the level of 8 yuan per dollar, the low from 2006, is still far away. The depreciation of the yuan is rather a forced measure in response to the decline in the currency of the main competitor in the Asia-Pacific region — the Japanese yen. Further narration requires answering the question of how high the US dollar can grow, and whether it is worth selling it against other currencies now. First of all, it should be noted that the dollar's growth is not over yet, although it has achieved its initial goals. At the same time, it should be remembered that the movement never develops in a straight line, and the dollar has now turned out to be sufficiently overbought to make a correction to its rising trend from a technical point of view, which will give us the opportunity to consider buying it, if, of course, there is a desire and, most importantly, a signal from the trading system. However, in the context of what is happening, a very significant reservation should be made. Even if we assume that the US dollar has reached its high, it will take at least three months to reverse it. Now the ECB and the Bank of England have rushed after the Fed, trying to somehow stop the inflationary spiral. However, it is not so easy to do this, given the pace set by the US Fed, and it takes time. The chronology of events can be presented as follows. The Fed will raise the rate at least once more at its next meeting, which will be held on November 1 and 2, by 0.75% points. Before this event, the ECB will also raise the rate by 0.75% at the end of October, thereby keeping the difference in rates between the euro and the dollar at the current value. Of course, the ECB may surprise and raise the rate by 1% at once, but then we will know about it in advance from the comments of officials, but now such an increase looks unlikely. Based on the logic of this assumption, it is safe to say that at least until the end of October 2022, the euro's exchange rate will not change its direction and may continue to decline. Fig.2: Technical picture of the euro/US dollar exchange rate The technical picture of the EURUSD exchange rate assumes a similar dynamics and now completely coincides with the fundamental calculations (Fig.2). The euro is in a downward trend. At the same time, the exchange rate reached the first target, located at 0.96, which was determined by the width of the previous range of 0.99-1.02, 300 points. It is logical to assume that after achieving the first goal, the course will grow a bit, or, in other words, go into correction. The main postulate of technical analysis is the rule: the movement will continue until we get the opposite. This means that we need to assume that the exchange rate of the euro will decline until the condition of a trend change is met. For the current situation, the condition for a trend change is an increase above the 1.02 level, before that, any increase in the EURUSD rate should be considered as a correction to the current downward trend. Fig.3: Technical picture of the USDJPY course In my subjective opinion, the situation in the Japanese yen is even sadder than with the euro. The Bank of Japan remains the only key central bank that has abandoned the policy of raising rates. This has a rather serious impact on the yen exchange rate, which leads to the fact that the BOJ, under pressure from allies dissatisfied with the devaluation, is even forced to intervene. However, this does not help much and may lead to the fact that the Japanese currency will test the level of 150 and even 155 yen per US dollar (Fig.3). Therefore, if any feeling that you take for intuition suggests that you sell the USDJPY pair here and now, then throw this thought out of your head. It will not lead to anything good. It will be possible to do this no earlier than the pair drops below the 140 level, and even then with great caution and a minimum lot size. With the British pound, everything is somewhat more complicated. The fact is that the BoE began to raise the rate earlier than the ECB began to do it, besides, the maintenance of the national currency rate is written in its charter. Previously, if necessary, the central bank did not disdain to resort to interventions, including not only verbal ones. Therefore, I wouldn't guess the depths at the level of parity of the pound and the dollar, although such a decline looks quite likely. Summing up, it should be noted that the US dollar continues to remain in an upward trend, supported by high interest rates and a decline in stock indices. The S&P 500 index updated the local low on Tuesday, September 27. The previous level was at 3631. If the month, quarter and fiscal year are closed below the 3600 mark, the fate of the US market in the 4th quarter will be very sad. With a high degree of probability, of course. Be careful, cautious and most importantly — follow the rules of money management!   Relevance up to 20:00 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/322832
Saxo Bank Podcast: The Upcoming Bank Of Japan Meeting, A Look At Crude Oil, Copper And More

The Japanese (JPY) Currency Shows Strong Resistance Against The Dollar (USD)

InstaForex Analysis InstaForex Analysis 28.09.2022 12:24
The dollar is again rushing like a tank in almost all directions. The yen is still on the defensive, but, apparently, the forces are already running out. Most analysts predict victory in this fight for the greenback. USD is tearing up and rushing The greenback showed impressive growth at the start of Wednesday. It jumped 0.5% at the beginning of the Asian session and reached a new 20-year high at 114.70. The key driver for the dollar was a sharp surge in the yield of 10-year US government bonds. Today, the indicator has exceeded 4% for the first time in 12 years. Hawkish comments from Federal Reserve officials contributed to the rapid rise in yields. Yesterday, three American politicians spoke out in favor of a more aggressive rate hike. Moreover, one of them, the president of the Federal Reserve Bank of Chicago, Charles Evans, announced the need to raise interest rates to the range of 4.50-4.75% in order to return inflation to the 2% target. Recall that now the interest rate in the United States is at the level of 3.0-3.25%, and the growth of consumer prices on an annualized basis is 9.1%. Of course, the fact that the Fed has to further strengthen its anti-inflation campaign cannot but please dollar bulls. Today they have become more active on almost all fronts. The greenback showed parabolic growth paired with the New Zealand dollar (+1%), the British pound (+0.9%), the Australian dollar (+0.8%) and the euro (+0.4%). The only hard nut for the greenback was the Japanese yen. The JPY, which has fallen against the USD more than other currencies this year, is holding surprisingly steady on Wednesday morning. At the time of release, the dollar-yen pair was trading at 144.70, which is 0.05% lower than the closing price of the previous day. The fragility of the yen The Japanese currency shows strong resistance against the dollar. However, there are no significant fundamental reasons that would contribute to the yen's growth. Most analysts associate the current strength of the JPY with the immunity received from the Japanese government. Recall that last week, for the first time since 1998, Japan intervened in support of its national currency. The politicians were forced to take such a step by a new sharp collapse of the JPY exchange rate. The yen was sent into free fall by Bank of Japan Governor Haruhiko Kuroda, who announced the continuation of an ultra-soft policy, despite the next rate hike in America. On the dovish decision of the BOJ, the USD/JPY pair broke through the psychologically important level of 145, which turned out to be a red line for the Japanese authorities. According to analysts, Japan will continue to zealously defend this peak and, if it is taken, will again intervene in the market. The risk of intervention is the only saving straw that yen bulls are clinging to now, while there are many more negative factors contributing to the further decline of the JPY. The main pressure on the Japanese currency continues to be exerted by the increasing divergence in the monetary policy of the Fed and the BOJ. Currently, the difference in US and Japanese interest rates is 4%, and everything points to its further growth. Fed officials are actively lobbying for a more aggressive policy, while the BOJ shows no signs of capitulation. The minutes of the BOJ's July meeting were published this morning. According to it, the board members still do not see the need to fight inflation by raising rates, despite the global tightening trend. Many experts believe that the downward trend in the yen will continue until Kuroda retreats from his outsider stance. The technical picture for the USD/JPY pair The 3-week-old descending resistance line around 145.00 is the nearest key obstacle that keeps the USD/JPY pair on its way to a new 24-year high. Bulls for the USD/JPY pair led the price to the level of 145 during the Asian session, but the chances of closing the dollar above this mark are still small. If bulls fail to break above the 145 mark in the short term, there may be a significant risk of a strong downward correction in the coming sessions.   Relevance up to 10:00 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. Read more: https://www.instaforex.eu/forex_analysis/322898
ECB's Knot: July Rate Hike Necessary, Beyond July Uncertain; Canadian CPI Supports Rates on Hold; Global Crypto Market at $1.2 Trillion; Oil Market Tightens with Russian Shipments Drop and China's Support Measures

As A Result Of The Bank Of Japan Intervention, The USD/JPY Pair Went Into A Steep Peak

InstaForex Analysis InstaForex Analysis 29.09.2022 11:03
The USD/JPY pair continues to tread in the 144-145 range, in which it has been stuck since the beginning of the week. Consolidation is pretty boring for both bulls and bears, but there is no trigger on the horizon yet. This year, the Japanese currency has fallen in price relative to its American counterpart by more than 20%. The reason for the weakening of the yen was the strong monetary divergence between the US and Japan. Last week, the dollar-yen pair set another high-profile record. After the Federal Reserve raised rates again, and the Bank of Japan left the indicator unchanged, the quote jumped to a new 24-year high at 145.90. The sharp fall of the yen forced the Japanese government to intervene in support of its national currency for the first time since 1998. As a result of the intervention, the USD/JPY pair went into a steep peak. However, the asset did not stay as a loser for long. It only took a couple of days for it to get back on track leading to the main goal for today – level 145. Since the beginning of this week, the dollar-yen pair has already come close to the cherished mark several times, but each time it rolled back. According to analysts, the main deterrent for dollar bulls at the moment is the risk of repeated currency intervention. Given the huge number of warnings from the Japanese authorities, traders still prefer not to get into trouble. However, the situation may change dramatically if a particularly powerful trump card in favor of the dollar appears on the market. You may ask: isn't it here now? Indeed, the dollar received strong support from the Fed last week. The US central bank not only raised rates, but also made it clear that it intends to tighten its monetary policy in the future. This week, American politicians have further intensified hawkish rhetoric, which contributed to the explosive growth of the dollar. The greenback has reached a new 20-year high, showing impressive dynamics in almost all directions, but not paired with the yen. The psychologically important 145 barrier still remains impregnable for the USD/JPY asset. This suggests that the market has already taken into account the further growth of discrepancies in the monetary policy of the Fed and the BOJ. Now traders need specifics: how big the gap in US and Japanese interest rates can become. If in the near future American officials again talk about raising the indicator by 100 bps, perhaps this will be the very impetus for the dollar, which will move it from the dead point. – Of course, the Japanese Ministry of Finance is aware of the current vulnerability of the yen. Probably, the authorities will continue to intimidate traders with interventions to deter speculators, Rabobank analysts warn. – Nevertheless, we are still guided in our 3-month forecast for the USD/JPY pair to the level of 147. As for the short-term dynamics of the asset, do not expect miracles in the coming days. Most experts believe that the dollar-yen pair will remain in the zone of broad consolidation. The technical picture for the USD/JPY 200-day exponential moving average at 141.20 scales higher. This indicates that the long-term trend is still stable. At the same time, the relative strength index (RSI) fluctuates in the range of 40.00-60.00, which indicates that the movement continues within the current range. For a decisive bearish reversal, the asset needs to fall below the previous week's low at around 140.35. Dollar bulls may push the pair higher after overcoming the previous week's high at 145.90. This may lead the quote to the August 1998 high at 147.67. And its breakthrough will send the dollar even further upward – to psychological resistance in the area of 150.00. Relevance up to 09:00 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. Read more: https://www.instaforex.eu/forex_analysis/323012
China's Deflationary Descent: Implications for Global Markets

A Strong Bearish Signal For The Equity Markets And A Significant Support Factor For Dollar (USD)

InstaForex Analysis InstaForex Analysis 29.09.2022 12:03
Stock markets in Europe and North America bounced back on Wednesday, thanks to growing demand for US Treasuries, which put pressure on their yields and dollar. There were no special reasons for growth, but the closing of short positions after a multi-day sell-off helped the markets recover the previous losses. However, the hawkish rhetoric of the Fed pointed to a continued increase in interest rates in the foreseeable future, so stock futures started to decline again today. Minutes ahead of the European trading session, the yield on 10-year bonds grew by 3.15% to 3.824%, while futures fell from 0.36% to 0.70%. This is a strong bearish signal for the equity markets and a significant support factor for dollar. Due out today is Germany's data on consumer inflation and revised US GDP figures for the second quarter. Forecasts say the former will rise to 1.3% m/m and 9.4% y/y, which will prompt the ECB to raise rates again by 0.75%. But this is unlikely to stimulate a strong growth in euro as the currency is affected by the current economic situation in the Eurozone. The latter, meanwhile, is expected to show a slight decrease to -0.6%, but a much larger fall will put pressure on market sentiment, which will increase the sale of stocks and purchases of dollar. Forecasts for today: USD/CAD The pair is currently testing the level of 1.3715. If it rises above it, further growth to 1.3835 is possible, especially amid a decline in crude oil prices and general negative dynamics in the markets. USD/JPY The pair is currently testing the resistance level of 145.00. If it rises above it, further growth to 146.00 is possible, especially amid a general negative dynamics in the markets and resumption of growth in the yield of US Treasuries.   Relevance up to 09:00 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/323002
Behind Closed Doors: The Multibillion-Dollar Deals Shaping Global Markets

CarMax Inc And SolarEdge Technologies Inc Are The Biggest Losers At The Close In The New York Stock Exchange

InstaForex Analysis InstaForex Analysis 30.09.2022 08:09
At the close in the New York Stock Exchange, the Dow Jones fell 1.54%, the S&P 500 fell 2.11% and the NASDAQ Composite fell 2.84%. The leading gainers among the components of the Dow Jones index today were The Travelers Companies Inc, which gained 1.76 points (1.15%) to close at 154.68. Visa Inc Class A rose 0.88 points or 0.49% to close at 180.06. Merck & Company Inc shed 0.14 points or 0.16% to close at 86.64. The losers were Boeing Co shares, which lost 8.11 points or 6.08% to end the session at 125.33. Walgreens Boots Alliance Inc was up 4.97% or 1.65 points to close at 31.55 while Apple Inc was down 4.91% or 7.36 points to end at 142. .48. Among the S&P 500 index components gainers in today's trading were Everest Re Group Ltd, which rose 3.07% to 267.41, STERIS plc, which gained 2.76% to close at 167.29, and also shares of W. R. Berkley Corp, which rose 2.73% to end the session at 65.18. The biggest losers were CarMax Inc, which shed 24.60% to close at 65.16. Shares of SolarEdge Technologies Inc lost 8.27% to end the session at 235.56. Quotes of Royal Caribbean Cruises Ltd decreased in price by 7.91% to 43.64. Leading gainers among the components of the NASDAQ Composite in today's trading were Senti Biosciences Inc, which rose 50.71% to hit 2.11, Avalon Globocare Corp, which gained 25.85% to close at 0.70, and also shares of TuanChe ADR, which rose 25.31% to close the session at 3.07. The biggest losers were Atlis Motor Vehicles Inc, which shed 54.82% to close at 33.95. Shares of Lion Group Holding Ltd lost 49.25% and ended the session at 1.01. Quotes of Twin Vee Powercats Co decreased in price by 29.01% to 2.52. On the New York Stock Exchange, the number of securities that fell in price (2631) exceeded the number of those that closed in positive territory (530), while quotes of 112 shares remained virtually unchanged. On the NASDAQ stock exchange, 2,842 stocks fell, 956 rose, and 224 remained at the previous close. The CBOE Volatility Index, which is based on S&P 500 options trading, rose 5.50% to 31.84. Gold futures for December delivery lost 0.07%, or 1.20, to hit $1.00 a troy ounce. In other commodities, WTI crude for November delivery fell 0.55%, or 0.45, to $81.70 a barrel. Futures for Brent crude for December delivery fell 0.55%, or 0.48, to $87.57 a barrel. Meanwhile, in the Forex market, EUR/USD rose 0.70% to hit 0.98, while USD/JPY edged up 0.21% to hit 144.46. Futures on the USD index fell 0.36% to 112.11.  Go to dashboard   Relevance up to 05:00 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. Read more: https://www.instaforex.eu/forex_analysis/294915
Asia morning bites - 16.05.2023

USD/JPY: What Makes Japanese Yen's (JPY) Fate So Miserable?

Kenny Fisher Kenny Fisher 30.09.2022 15:58
The yen has been drifting for most of the week and the trend is continuing today. USD/JPY is almost unchanged at 144.32. Japanese data surprises on the upside Japan has released strong industrial production and retail sales data, a further indication that the Japanese economy is improving. Industrial production rose for a third straight month in August, climbing 2.7% MoM. This was up from 0.8% in July and crushing the consensus of 0.2%. Retail sales for August jumped 4.1% YoY, above the consensus of 2.8% and higher than the 2.4% gain in July. Retail sales have posted 10 gains in the past 11 months, indicative of solid consumer spending, despite Japan’s weak economy and households grappling with relatively high inflation. Read next: Differences In Wealth Per Adult, Disney Park Re-Opened And Retirement Theme| FXMAG.COM It was a wild week for most of the majors, but the Japanese yen has settled down after USD/JPY pushed close to the 145 line on Monday. Japan’s stunning currency intervention has kept the yen below the 145 line, but it’s difficult to imagine that unilateral action will succeed in stemming the yen’s prolonged descent, for two reasons. First, the Federal Reserve is likely to deliver large rate increases in October and November. With the Bank of Japan showing no indication that it will ease up on yield curve control, the US/Japan rate differential will widen and send the yen lower. Second, the yen is caught in a tug-of-war between the MoF, which wants to see a stronger yen, and the BoJ, which is focused on maintaining an ultra-accommodative policy, which has kept JGB yields at low levels and weighed on the yen. If the yen does fall below 145, things will get very interesting, as the ball will be squarely in the court of the MoF, which will have to decide whether to balk or step in with another intervention. USD/JPY Technical There is resistance at 144.81 and 146.06 USD/JPY has support at 143.21 and 141.88 This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Japanese yen shrugs after solid data - MarketPulseMarketPulse
Why India Leads the Way in Economic Growth Amid Global Slowdown

The GBP/USD Pair Gained Bullish Pace, September PMI Indices And Continued Volatility In The Markets

TeleTrade Comments TeleTrade Comments 03.10.2022 10:10
Here is what you need to know on Monday, October 3: Markets stayed relatively quiet during the Asian trading hours on Monday but volatility picked up in the early European morning. Political developments in the UK are watched closely by market participants ahead of S&P Global's final September PMIs for Germany, the euro area, the UK and Canada. The US economic docket will feature the ISM September Manufacturing PMI later in the day. Several FOMC policymakers, including Kansas City Fed President Esther George and New York Fed President John Williams, will also be delivering speeches in the second half of the day. After having registered modest gains on Friday, the US Dollar Index turned south and broke below 112.00. US Stock index futures are trading mixed in the European session and the benchmark 10-year US Treasury bond yield loses over 1% below 3.8%.  During the Asian trading hours, the data from Japan showed that the Tankan Large Manufacturing Index declined to 8 in Q3, missing the market expectation of 11. On a positive note, the Non-Manufacturing Index edged higher to 14 in the same period from 13. Meanwhile, Japanese Finance Minister Shunichi Suzuki reiterated that they continue to watch FX moves with a strong sense of urgency. USD/JPY showed no reaction to Suzuki's comments or the data releases and it was last seen moving sideways slightly below 115.00. GBP/USD gathered bullish momentum and jumped to its highest level in over a week near 1.1300. Reports suggesting that the UK government is expected to roll back the proposed scrapping of the higher rate of income tax helped the British pound gather strength. British Finance Minister Kwasi Kwarteng confirmed these reports by announcing that the government will not go ahead with a plan to scrap a 45% rate of income tax. Following the initial bullish reaction, the pair returned to the 1.1200 area, where it was up around 0.3% on the day. EUR/USD is having a difficult time making a decisive move in either direction and trading in a narrow range near 0.9800.  Gold snapped a two-week losing streak on Friday and edged higher toward $1,670 early Monday. Although XAU/USD returned to the $1,660 area in the European morning, it managed to hold its ground amid retreating US Treasury bond yields.  Bitcoin closed in negative territory on Saturday and Sunday but found support near $19,000. Ethereum fell nearly 4% over the weekend and dropped below $1,300 before staging a rebound early Monday. ETH/USD was last seen rising 1% on the day at $1,290.
The US Has Again Benefited From Military Conflicts In Other Parts Of The World, The Capital From Europe And Other Regions Goes To The US

The US Has Again Benefited From Military Conflicts In Other Parts Of The World, The Capital From Europe And Other Regions Goes To The US

InstaForex Analysis InstaForex Analysis 03.10.2022 10:48
The end of September was a complete disaster for the global markets. Traders hoped that the US Federal Reserve would at least ease the pace of rate hikes. But this never happened. On the contrary, the Fed officials and its chairman reiterated that they see a further rate increase as their priority aimed at slowing down galloping inflation. All hopes were destroyed last month, resulting in the biggest decline in the stock market and the surge in demand for safe-haven assets. Over the past decades, the US dollar has been traditionally viewed as a reliable store of value in times of economic turmoil. The already serious economic crisis is aggravated by high geopolitical tensions which is the main reason why the capital from Europe and other regions goes to the US. Notably, the US has again benefited from military conflicts in other parts of the world just as it happened 80 years ago. The Fed's recent forecast for GDP, inflation, and unemployment as well as its plan to hike rates that were announced at its latest September meeting signaled that the regulator braces for more headwinds next year. This means that the stock market will largely depend on high rates while the US dollar will continue to strengthen despite the process of monetary tightening launched by other global central banks. So, what to expect in the market today and in the week ahead? Most likely, stock markets will still be focused on rate hikes and geopolitical tensions between Russia and the Western coalition led by the US. The broad-based S&P 500 index is expected to decline to the level of 3,000.00 after passing the interim support of 3,300.00. The European and Russian stock markets are likely to follow a similar trajectory. On Forex, we may observe a short-term consolidation phase ahead of the RBA and RBNZ monetary policy meetings this week as well as an important jobs report in the US. Any negative news, especially from the US, will boost the demand for the US dollar. So, after a quick fall, USD may recover again, being a preferred safe-haven asset in these uncertain times. As for today, the weak data on Manufacturing PPI in the US may serve as a signal to buy the US dollar after its short decline in the Asian and European sessions. Daily forecast: GBP/USD The pair is going through a consolidation phase under 1.1225 ahead of the Manufacturing PPI data release in the UK and US. The downbeat data in both countries may stop the pair from a breakout. Instead, it may reverse and move down to 1.0915. USD/JPY The pair is testing the level of 145.00. Consolidation above this range will open the way towards the upper target of 145.90, the recent high formed on September 22.   Relevance up to 09:00 2022-10-05 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/323222
Asia morning bites - 16.05.2023

USD/JPY: Would Japanese MoF Conduct A Forex Intervention Again?

Kenny Fisher Kenny Fisher 03.10.2022 13:55
USD/JPY has edged higher at the start of the week, trading at 145.10 in the European session. Tokyo Core CPI next Japan’s Tankan indices for Q3 were mixed and the yen had a muted response. Manufacturing dropped to 8, down from 11 in Q1 and missing the consensus of 11 points. Services ticked higher to 14, up from 13 and just above the forecast of 13 points. Later in the day, Japan releases a key inflation gauge, Tokyo Core CPI. The index is expected to rise to 2.8% in August, up from 2.4% in July.   Inflation in Japan has risen to 3%, much lower than other major economies but a huge change after years of deflation. The Bank of Japan has been keeping an eye on inflation, but Governor Kuroda has said he will not change the Bank’s ultra-loose policy until wages rise and it’s clear that inflation is not transient. Sound familiar? Fed Chair Powell and ECB President Lagarde dismissed high inflation as transient but were forced to tighten policy as inflation never let up. The BoJ has been very firm with its yield curve control, keeping JGB yields at low levels. With US Treasury yields moving higher, the US/Japan rate differential has widened, and the yen has fallen sharply. The Ministry of Finance (MOF) stepped in with an intervention in September, after the yen hit 145.90. The dramatic move sent the yen higher, but only for a few days. USD/JPY has been trading close to the 145 line and has pushed just above it today. With the US dollar continuing to rally, it seems likely that the yen will continue to lose ground. It will be interesting to see if the Ministry of Finance intervenes again to prop up the yen. If it does, we can expect some volatility from the Japanese yen. USD/JPY Technical There is resistance at 144.81 and 146.06 USD/JPY has support at 143.21 and 141.88 This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Japanese yen tiptoes at 145 line - MarketPulseMarketPulse
Forex: USD/JPY Is Expected To Reach 145 In The End Of The Year. Why Is That?

Forex: USD/JPY Is Expected To Reach 145 In The End Of The Year. Why Is That?

Conotoxia Comments Conotoxia Comments 03.10.2022 15:45
In September, the Japanese government and the Japanese central bank intervened in the forex market with the aim of strengthening the yen. Earlier, the USD/JPY exchange rate had rallied close to the JPY 146 per USD level, reaching its highest level since 1998, which worried the Japanese authorities. This morning, the USD/JPY exchange rate approached the levels again, before the intervention. Government intervention to strengthen the Japanese currency Tonight, Japanese Finance Minister Shunichi Suzuki told reporters in Tokyo that the government remains ready to take the necessary responses to excessive currency movements. He added that he would continue to keep a close eye on forex movements, as stability is important and sudden unilateral movements are not desirable. The difference in interest rates between the U.S. and Japan is not the only factor affecting forex movements, there are various factors behind rate changes, Suzuzki added in quotes published by Bloomberg news agency. Last month's intervention had some impact on speculators, the Japanese finance minister pointed out. Japan spent $19.7 billion on the September currency intervention, Bloomberg reported. Source: Conotoxia MT5, USDJPY, H4 Japan's fight over the yen exchange rate and bond yields A cycle of interest rate hikes is underway in developed economies around the world, but not in Japan. The Japanese want to keep interest rates close to zero at all costs, and still want to control their bond yield curve. Investors, on the other hand, probably want to necessarily get rid of as many Japanese bonds as possible, as long as their prices are jacked up by the central bank. As a result, Japanese government bonds rose today after the central bank increased its planned fourth-quarter debt buying. The Bank of Japan announced Friday it would increase its purchases of bonds with maturities above five years in the fourth quarter 2022, Bloomberg reported. USD/JPY technical analysis Source: Conotoxia MT5, USDJPY, D1   In light of possible currency interventions, i.e. factors typically outside the market, the importance of technical analysis may be less. Nevertheless, looking at the USD/JPY chart, we can see a significant expanding wedge formation, where the market seemed to turn around in the area of its upper limit, as well as a rising wedge formation. In addition, the RSI relative strength indicator has retreated from overbought levels, but may be close to drawing a potential divergence. Short-term support may also come from the 20-session average, above which the market was in an earlier trend. Can changes be expected from the Bank of Japan's action? Many people wonder why the Bank of Japan  is not going to  change its monetary policy, as other central banks around the world have changed it, but  would try to buy time with currency interventions. However, there is no clear answer to this question, for believing the BOJ's announcements, this  seems l not changing  soon. According to National Australia Bank analysts, the December forecast for USD/JPY was raised to JPY145 from JPY133. "We are forced to abandon our earlier view that we will see changes in the way the BOJ's interest rate and yield curve control (YCC) policies work this year," - NAB analysts quoted by Bloomberg wrote. BOJ Governor Kuroda has made it clear that the policy stance of unchanged or lower interest rates will be maintained, probably for another two to three years. Did you know that CFDs allow you to trade on both falling and rising prices? Derivatives allow you to open buy and sell positions and thus trade on rising as well as falling quotes. At Conotoxia, you can choose from CFDs on more than 100 currency pairs. For example, if you want to find a CFD on the USD/JPY, you only need to follow 4 simple steps: To access Trading Universe - a state-of-the-art hub of financial, information, investment and social products and services with a single Smart Account, register here. Click "Platforms" in the "Invest&Forex" section. Choose one of the accounts: demo or live On the MT5 or cTrader platform, search for the CFD currency pair you are looking for and drag it into the chart window. Use one-click trading or open a new order with the right mouse button.   Daniel Kostecki, Director of the Polish branch of Conotoxia Ltd. (Conotoxia investment service) Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results. Read more on Conotoxia.com
"Private investors will be required to increase their gilt exposure by at least £268bn in FY2023-24"

The Weakening Of Confidence In The British Government| Oil Prices Extended Gains And More

Saxo Bank Saxo Bank 04.10.2022 09:09
Summary:  After a series of positive surprises on US economic data last week, the disappointment from the ISM manufacturing was a big deal for the markets. US Treasury yields slumped, with rising expectations of an earlier Fed pivot which we think may be premature. But that helped equity markets close higher, more a signal of positioning rather than expectations. UK’s tax cut U-turn instilled a fresh bid in sterling, but further impeded confidence in the government. Oil prices extended gains and Gold also reclaimed the $1700-mark. On watch today will be how the Reserve Bank of Australia transitions to a slower rate hike pace. What is happening in markets? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) rally over 2% US stocks rallied for the first day of the quarter with the Nasdaq100 up almost 2.4%, and the S&P500 up about 2.6%, which is the best gain since July 27. It comes as the 10-year US Treasury yield rolled over to trade at around 3.65% (after topping 4% at one-point last week). The risk-on mood was fueled by several things; firstly, the UK government did a U-turn and will reverse plans to scrap the top rate of income tax. Secondly, the United Nations called on the Fed and other central banks to halt interest rates hikes. And thirdly, what also boosted sentiment was that two Fed speakers at the weekend, Brainard and Daly were reportedly discussing the downside of hiking too fast. And fourthly, weaker than expected US economic news came out with; US manufacturing falling for the third time in four months. As for the S&P500, the technical indicators; the MACD and the RSI also remain in oversold territory, which supports the notion that some investors believe a short-term rebound may be seen perhaps amid the risk-on mood. However, caution still remains in the air ahead of further Fed's hikes. U.S. treasury yields (TLT:xnas, IEF:xnas, SHY:xnas) The US Treasury yields retreated on Monday as a subdued ISM manufacturing print led to calls of slower Fed tightening and an earlier Fed pivot, which had already been building last week as well due to the risk of wider market disruptions as things have started to break. The reversal of the UK tax cut also supported Gilts, and some pass-through was seen to the US Treasuries. 2-year yields declined over 16bps to 4.11%, while the 10-year was down 19bps to 3.63%. Australia’s ASX200 (ASXSP200.1) poised to raise 1.5% with a focus on oil stocks Commodities will be focus on the ASX today with Oil and LNG stocks like Woodside (WDS), Santos (STO) set to see some action after the oil and gas prices jumped 5%. Other stocks to watch include Worley (WOR) who services the energy sector. Iron ore companies will be watched as well, supported higher by the iron ore price jumping 1.8% to US$94.50. So it’s worth watching if BHP, RIO and CIA can extend their short-term uptrend. AUDUSD rallies back to 0.6516 ahead of RBA’s expected 0.5% hike Australia’s RBA is likely to make another jumbo rate hike and take rates up by 50 bps (0.5%) to 2.85% on Tuesday (which is what consensus thinking is). And then after that, the RBA is likely to move in smaller increments, according to interest rate futures and what RBA Governor Phillip Lowe signaled he wants. With the majority of Australian mortgages at floating-rates, and wage growth being stronger, the RBA’s thinking is that most Aussies will be able to sustain the higher rates as a lot of Australian made extra mortgage repayments amid the lockdowns, as pulled back on discretionary spending. However there are about 2.5 million Aussies who have no buffer. And 9.8 million Aussies have mortgages. So we still think a property pull back might be on the cards. It’s the magnitude of the pull back that is being questioned. The technical indicator, the MACD suggests the AUDUSD could rally if the RBA proceeds with a likely 0.5% hike. However over the long term, our house view remains bearish on the AUDUSD until Fed hikes cool, and commodity demand picks up from China. GBPUSD made a strong recovery, will it last? Cable was seen advancing above the 1.13 handle in early Asian hours on Tuesday as it extended Monday’s gains following announcement of plans to scarp the tax cut by the UK government. A softer dollar also supported pound’s gains, amid a slide in US Treasury yields. However, more Fed tightening is still in the cards and the lack of trust in the new UK government cannot be ignored even if the tax policy has been reversed for now. Focus on the BOE meeting on November 3 where 115bps rate hike is priced in, lower than last week’s pricing of 150bps. However, a full-budget statement will be released before that and further austerity measures, if included, can bring fresh downside for the sterling. EURGBP slid below 0.8700. Crude oil (CLX2 & LCOX2) extends gains on OPEC+ chatter Crude oil trades higher ahead of Wednesday’s OPEC+ meeting in Vienna as the alliance is considering a production cut of more than 1 million barrels/day to support prices following a 25% slump during Q3 2022. That would be the biggest cut since the pandemic with OPEC+ slashed production by 10 million barrels/day as demand collapsed. WTI futures rose above $83/barrel while Brent was close to $90. With several OPEC+ producers, including Russia, producing below target, and only Saudi Arabia may be able to limit production without a loss in additional market share. Meanwhile, expectations of an earlier Fed pivot also stabilized demand weakness expectations. Gold (XAUUSD) reclaims 1700 on lower US yields Gold extended recent gains as yields on Treasuries continued to decline. After the 10-year yields were seen topping the 4% level at one point last week, they are now off about 40bps to end at 3.63% yesterday. Meanwhile, a softer dollar and rising geopolitical tensions have also brought back investor demand for the yellow metal. A weaker ISM manufacturing print yesterday (read below) has also increased calls for an earlier Fed pivot, which we think may be premature. But the increasing calls for a recession have meant gains for Gold which was last seen back at $1,700/oz.   What to consider? US ISM manufacturing disappoints The headline for September’s US ISM manufacturing came in weaker than expectations at 50.9 from the prior month’s 52.8 and expected 52.2. Both employment and new orders both dropped into contractionary territory printing 48.7 (exp. 53.0, prev. 54.2) and 47.1 (prev. 41.3), respectively. The report showed that higher interest rates are starting to weigh on business investment sentiment, at least in the interest rate sensitive sectors. Still, the inflationary gauge of prices paid declined to 51.7 (exp. 51.9, prev. 52.5) falling for the sixth straight month. Supplier delivery times suggested some easing on the supply chains, but overall the report indicated the case of a slowdown in the US economy as rapid Fed tightening continues. UK scraps plans to cut taxes The UK government confirmed reports it will not go ahead with the abolition of the 45p rate of income tax but they are committed to borrowing extra over the winter to help with the ongoing energy crisis. The Chancellor told BBC the proposal was "drowning out a strong package", which includes support for energy bills, cuts to the basic rate of income tax, and the scrapped increase in corporation tax. However, he saw the abolition of 45p tax rate as a distraction from the overriding mission, and thus decided to remove it. This puts water on the Bank of England’s bond-buying, and exposes further the cracks in UK policymaking, thus suggesting that the UK assets are not out of the woods. A full-budget, which has now been brought forward to before the next BOE meeting on November 3, could include more tax cuts. Fed pushes back on an earlier pivot Fed’s NY President John Williams repeated inflation is too high and the Fed's job is not done, also saying that the monetary policy is still not in restrictive zone, pushing back on some calls for an earlier Fed pivot. He acknowledged signs of a slowdown in the housing sector or the consumer and business investment spending, but nothing that could deter the Fed from fighting inflation. On forecasts, he sees inflation likely down to 3% by next year (median view for Core PCE 3.1%), and the US is likely to see unemployment rise to 4.5% by end of 2023 (median view 4.4%). Thomas Barkin (2024 voter) made the case for more inflation in the post-pandemic world, noting that the Fed must consider global developments, but the focus is on the US. Japan’s Tokyo inflation accelerates further Japan’s September Tokyo CPI came in at 2.8% YoY, a notch softer than last month’s 2.9% YoY and in-line with expectations, but the core-core (ex-fresh food and energy) print accelerated to 1.7% YoY from 1.4% YoY, also coming in ahead of expectations at 1.4% YoY. Higher global food and energy prices along with a record weak yen has brought import price pressures on Japan’s economy, and this print hints at further gains in CPI on the horizon. While the pressure on the Bank of Japan to hike rates may have eased for now as US yields are easing, but there is still more Fed tightening in the pipeline and fresh pressures cannot be ignored. Reserve Bank of Australia may step away from moving to a slower rate hike pace The Reserve Bank of Australia is scheduled to announce its next rate decision on Tuesday, October 4. Governor Lowe had previously signalled that the pace of rate hikes is likely to slow from here after four consecutive rate hikes of the magnitude of 50bps. However, money markets and Bloomberg consensus forecast is still calling for another 50bps rate hike at the October meeting suggesting that RBA may delay taking the foot off the pedal just yet. The recent slide in the Australian dollar and worries over a turmoil in global financial markets may prompt the policymakers to front-load more of the rate hikes while the economy is still holding up. Retail sales data last week was upbeat while the first monthly inflation data reading at 6.8% is only slightly off the 7% levels seen in the preceding month. So, even as a monthly meeting can ensure a steady pace of rate hikes even with a smaller 25bps rate move, policymakers would possibly prefer to make a larger move this week to provide some support to the AUD. Likewise, the Reserve Bank of New Zealand is also expected to hike rates by another 50bps at their October 6 meeting.   For a week-ahead look at markets – tune into our Saxo Spotlight. For a global look at markets – tune into our Podcast.   Source: https://www.home.saxo/content/articles/equities/market-insights-today-4-oct-04102022
The USD/JPY Price Seems To Be Optimistic

Bulls Again Pushed The US Dollar To Japanese Yen (USD/JPY) Pair

InstaForex Analysis InstaForex Analysis 04.10.2022 10:38
Yesterday, bulls again pushed the USD/JPY pair above the key 145 mark, but failed to gain a foothold there. The yen turned out to be a tough nut to crack, which is still too tough for the dollar bulls. For a penny of ammunition, for a ruble of ambition Trampling the USD/JPY pair, which lasted all last week, unexpectedly gave way to a decisive upward movement on Monday morning. Lacking a new fundamental catalyst, the dollar miraculously managed to hit the 145 peak it tested in September again. Recall that the last time this barrier was captured turned out to be a disaster for the greenback. In response to the strong fall of the yen, the Japanese authorities carried out the first intervention in 24 years to support their national currency. Having touched a potentially dangerous line, this time the greenback was more cautious and without intervening in the market, it bounced back as if scalded. This served as yet another confirmation that USD/JPY bulls are still wary of intervention and do not want to draw fire on themselves. Of course, the dollar still has a strong amulet in its pocket that will almost save it from a steep plunge. We are talking about the growing monetary divergence between the US and Japan. But the market is well aware that this is no longer enough for the USD to rise. With the Japanese government continuing to threaten to intervene again, the dollar needs a big boost in the form of strong economic data. A strong US economy will definitely allow the Federal Reserve to satisfy all its hawkish ambitions, and weak macroeconomic statistics, on the contrary, will prevent this. Recall that at the September meeting, the US central bank raised interest rates by 75 bps and reaffirmed its willingness to raise the rate more aggressively if inflation continues to be high. Nevertheless, many analysts believe that the 75 bps step is the ceiling for the Fed. The US central bank is unlikely to decide on anything more, given the uneven economic data. This opinion was supported by the latest index of business activity in the US manufacturing sector. The ISM reported a reading of 50.9 in September, lower than its forecast of 52.2. After the release of pessimistic statistics, the yield on 10-year US bonds fell by 14 basis points to 3.66%, and the dollar significantly fell. Flat may drag on Today's portion of US economic data is also unlikely to please the USD/JPY bulls. Tuesday's key report will be the release of the index of business activity in the services sector from ISM. Economists forecast a decline in September to 56 compared to the previous value of 56.9. The data on the index of new orders for the last month may also turn out to be weak. The indicator is expected to fall to 58.9 against 61.8 recorded in August. Preliminary estimates are putting significant pressure on the dollar-yen this morning as it struggles to break out of the consolidation phase to try again to break through the defenses at the psychologically important 145 mark. At the time of release, the quote jumped almost 0.2% and traded around 144.80. The trigger for the asset was a dovish statement by Japanese Prime Minister Fumio Kishida. The day before, the official said that the government will continue to stimulate the economy, while trying to make the most of the weak yen. The geopolitical factor also provided significant support to the dollar - the escalation of tension between Japan and North Korea. At the beginning of the day, it was reported that Pyongyang, which had already tested an unprecedented number of missiles this year, had fired another short-range ballistic projectile. This time, the target of the North Korean military appeared to be the Hokkaido area, which is considered the second largest Japanese island. In response to the missile launch over Japan, the Hokkaido authorities issued an air raid alert and urged the people of the region to take shelter. Meanwhile, Japanese Defense Minister Yasukazu Hamada has signaled that Tokyo is considering all options for strengthening its defenses, including a counterattack. If the conflict between the countries continues to escalate, the Japanese yen may weaken even more. In this case, bulls on the USD/JPY pair will finally have a real chance to settle above the 145 level. However, we recommend that traders do not force things yet and be patient, especially since most forecasts for the USD/JPY pair point to further movement in the flat. Most likely, in the coming days, the dollar and the yen will continue to pull the price rope in the 144-145 range. Technical picture for the USD/JPY pair The short-term trend is neutral, but has a tendency to the downside. As the quote fell below the 20-, 50- and 100-EMAs yesterday, this could spell further losses. If the bears manage to take the asset below 144, this will open a fast route to 143.90.   Relevance up to 09:00 2022-10-07 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. Read more: https://www.instaforex.eu/forex_analysis/323332
On the New York Stock Exchange A Lot Of Shares Fell, The Biggest Losers Were Bit Brother Ltd And Avenue Therapeutics Inc

On the New York Stock Exchange A Lot Of Shares Fell, The Biggest Losers Were Bit Brother Ltd And Avenue Therapeutics Inc

InstaForex Analysis InstaForex Analysis 06.10.2022 08:07
At the close of the New York Stock Exchange, the Dow Jones fell 0.14%, the S&P 500 fell 0.20%, and the NASDAQ Composite fell 0.25%. The leading performer among the components of the Dow Jones index today was Nike Inc, which gained 2.46 points or 2.78% to close at 91.10. Visa Inc Class A rose 2.02 points or 1.09% to close at 187.67. UnitedHealth Group Incorporated rose 3.90 points or 0.75% to close at 527.07. The biggest losers were Goldman Sachs Group Inc, which shed 5.87 points or 1.86% to end the session at 309.00. Shares of JPMorgan Chase & Co rose 1.38 points (1.23%) to close at 110.39, while Dow Inc shed 0.56 points (1.20%) to close at 46 .06. Leading gainers among the S&P 500 components in today's trading were Illumina Inc, which rose 6.56% to hit 218.52, Schlumberger NV, which gained 6.26% to close at 41.57, and Gap Inc, which rose 5.19% to end the session at 9.72. The biggest losers were Lumen Technologies Inc, which shed 9.45% to close at 7.28. Shares of Enphase Energy Inc shed 9.25% to end the session at 261.60. Quotes Vornado Realty Trust fell in price by 6.38% to 22.47. The leading gainers among the components of the NASDAQ Composite in today's trading were Chardan Nextech Acquisition 2 Corp, which rose 102.63% to hit 21.54, Nauticus Robotics Inc, which gained 96.27% to close at 6.32. , as well as shares of Pineapple Holdings Inc, which rose 93.01% to end the session at 2.76. The biggest losers were Bit Brother Ltd, which shed 42.97% to close at 0.18. Shares of Avenue Therapeutics Inc shed 41.59% to end the session at 8.47. Quotes Scienjoy Holding Corp fell in price by 36.99% to 1.38. On the New York Stock Exchange, the number of securities that fell in price (2102) exceeded the number of those that closed in positive territory (991), while quotes of 107 shares remained virtually unchanged. On the NASDAQ stock exchange, 2,313 companies fell in price, 1,443 rose, and 198 remained at the level of the previous close. The CBOE Volatility Index, which is based on S&P 500 options trading, fell 1.79% to 28.55. Gold futures for December delivery shed 0.28%, or 4.90, to hit $1.00 a troy ounce. In other commodities, WTI crude for November delivery rose 1.76%, or 1.52, to $88.04 a barrel. Futures for Brent crude for December delivery rose 2.07%, or 1.90, to $93.70 a barrel. Meanwhile, in the Forex market, EUR/USD fell 0.96% to hit 0.99, while USD/JPY edged up 0.35% to hit 144.60. Futures on the USD index rose 1.00% to 111.08.   Relevance up to 04:00 2022-10-07 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. Read more: https://www.instaforex.eu/forex_analysis/295644
The Japan Central Bank’s Decision Sent The Yen (JPY) Sliding

Japan's Finance Minister Said That The Government Stands Ready To Intervene In Markets

TeleTrade Comments TeleTrade Comments 07.10.2022 10:02
USD/JPY struggles to gain any meaningful traction and oscillates in a range on Friday. Speculations that Japanese authorities might intervene in the markets cap the upside. The underlying USD bullish sentiment acts as a tailwind ahead of the US NFP report. The USD/JPY pair fails to capitalize on its gains recorded over the past two trading sessions and oscillates in a narrow range through the early European session on Friday. The pair is currently placed around the 145.00 psychological mark and remains at the mercy of the US dollar price dynamics. Growing acceptance that the Fed will stick to a more aggressive rate hiking cycle to tame inflation continues to act as a tailwind for the greenback and the USD/JPY pair. In fact, the markets have been pricing in another supersized 75 bps Fed rate hike move in November. The bets were reaffirmed by the recent hawkish comments by several Fed officials, reiterating that the US central bank remains committed to bringing inflation under control. Furthermore, the widening of the US-Japan rate differential is seen weighing on the Japanese yen and offering support to the USD/JPY pair. The prospects for a faster policy tightening by the Fed remain supportive of elevated US Treasury bond yields. In contrast, the Bank of Japan remains committed to keeping JGB yields at low levels. That said, intervention fears hold back bulls from placing fresh bets and capping gains for the major. Japanese Prime Minister Kishida talked about the weakness in the domestic currency and said that the recent sharp, one-sided yen moves are undesirable. Kishida added that the intervention last month reflected the view that we cannot turn a blind eye to speculative FX moves. This comes after Japan's finance minister Shunichi Suzuki said on Monday that the government stands ready to intervene in markets to prevent deeper losses in JPY. Market participants also seem reluctant and prefer to move to the sidelines ahead of the crucial US monthly employment details, due for release later during the early North American session. The popularly known NFP report will influence Fed rate hike expectations. This, in turn, will play a key role in determining the near-term trajectory for the buck and provide a fresh directional impetus to the USD/JPY pair.
GBP: BoE Stands Firm on Bank Rate and Mortgage Interest Relief, EUR/GBP Drifts Lower

Forex Interventions: Central Banks Of Japan, England, Czech And More! It's Unbelievable How Many Central Banks Stepped In To Fight With Powerful US Dollar (USD)

Alex Kuptsikevich Alex Kuptsikevich 07.10.2022 14:21
More and more of the worlds central banks are turning to currency interventions to keep their currencies from weakening. While each central bank is saving its currency, they are all working together to undermine the Dollars value by increasing its global supply. Bank of Japan protecting USD/JPY  For the last two weeks, Japan has been protecting the yen from further weakening by keeping the USDJPY above 145. At the same time, the Bank of Japan is not changing its ultra-soft monetary policy. Given Japans deep pocket of more than 1 trillion US treasuries, this promises to be an extended play, attracting speculators interest in buying into the pair on the downside. British Pound supported The Bank of England reportedly entered the market last week to keep the pound from collapsing. Record lows in the Indian rupee also forced the countrys central bank to intervene in the market. There is little information on China, but there is also a large force there, reversing the rate on the rise above 7.20, as it has done since 2019. Hong Kong and the Czech Republic have been injecting dollars into the markets. Bloomberg's analysis Bloomberg calculates that global foreign exchange reserves have fallen by 1 trillion to 12 trillion since the start of the year, only about half of which is due to a rising dollar, with the other half coming from dollar sales. We are seeing more and more countries standing up to national currencies in an attempt to contain inflation. If this trend continues to gather momentum, multiple streams promise to become a full-flowing river, raising the overall level of dollar liquidity. Check out our comment on RBA: Interestingly, the trend towards defensive interventions is detrimental to Fed policy, so the latter can only strengthen and extend its active steps to tighten monetary policy. And this game is against the interests of the majority in the world, so developments promise to be fascinating. Even if a host of smaller central banks fail to prevent the Dollar from renewing the highs reached at the end of last month, further US currency growth promises to be much more complex and slower. The 16-month dollar growth trend promises to stop being a one-way street.
Asia Market: Exports In Indonesia Are Likely To Continue To Grow, Chinese Interest Rate Decision Ahead

Asia Stock Market: MSCI’s Index Of Asia-Pacific Shares Outside Japan Down And Japan’s Nikkei 225 Remains Mostly Steady

TeleTrade Comments TeleTrade Comments 12.10.2022 09:28
Looming intervention from Japan, economic fears cited by BOE’s Bailey, IMF keep bears hopeful. Yields grind higher as London/Tokyo struggle to defend respective currencies. Chinese shares lead bears, KOSPI fails to justify BOK’s rate hike. Asian stocks hold lower grounds, led by China, as economic slowdown fears join pre-Fed Minutes anxiety during early Wednesday. Even so, sluggish yields and an absence of major data/events restrict immediate moves. That said, MSCI’s index of Asia-Pacific shares outside Japan renews the 30-month low, down 0.75% intraday by the press time, whereas Japan’s Nikkei 225 remains mostly steady around a one-week low. Earlier in the day, USDJPY crossed the 145.90 level and pushed the Japanese policymakers to defend the domestic currency. Following the same, Japan’s Chief Cabinet Secretary Hirokazu and Finance Minister Shunichi Suzuki crossed wires while showing readiness to tame the price move, if needed. Elsewhere, China’s firmer determination to defend the zero-covid policy joins the recently gradual fall in the domestic currency to renew fears of the People’s Bank of China (PBOC), which in turn led the markets in Beijing towards witnessing more than 1.0% daily loss. While following the same, New Zealand’s NZX 50 drops 1.0% but Australia’s ASX 200 prints mild gains as Reserve Bank of Australia (RBA) Assistant Governor Luci Ellis mentioned, that the central bank’s policy is no longer in an expansionary place. However, comments like, “The neutral rate was a moving target and hard to determine at any stage in time,” seemed to have weighed on the Aussie stocks. South Korea’s KOSPI prints 0.25% intraday gains even after the Bank of Korea announced a rate hike while Indonesia’s IDX Composite traces Chinese equities to drop 0.65% at the latest. On a broader front, S&P 500 Futures remain sidelined around monthly low but the Treasury bond yields are mostly firmer, despite the latest inaction, which in turn portrays the market’s rush towards risk safety. Moving on, Federal Open Market Committee (FOMC) Meeting Minutes will be eyed for clear directions amid hawkish Fed bets. Also important will be the moves by the British and the Japanese policymakers to defend the GBP and the JPY respectively.
Oil Prices Rise as OPEC Cuts Output and API Reports Significant Inventory Drawdown

Bank Of England (BoE) Interventions Ineffective | The USD/JPY Pair Spiked Above The 146 Level For The First Time In 24 Years

Swissquote Bank Swissquote Bank 12.10.2022 10:37
We are only Wednesday, and the Bank of England (BoE) already intervened twice this week, to cool down the unbearable negative pressure on the British sovereign bonds. But the BoE Governor Bailey’s lack of tact sent all efforts up in smoke. The UK sovereign and sterling remain under a decent selling pressure. All eyes are on FOMC minutes and the US inflation data Beyond Britain, all eyes are on FOMC minutes and the US inflation data. Today, the minutes from the FOMC’s latest meeting will reveal if some Federal Reserve (Fed) members are concerned about going ‘too fast’ in terms of rate hikes. US will also reveal the latest producer price index for the month of September. The US factory-gate prices are expected to have slowed from 8.7% to around 8.4%. Then tomorrow, we will have a better insight about the situation in consumer prices. The headline CPI is expected to have slowed from 8.3% to 8.1%, but core inflation may have spiked higher, which is bad news for those praying for the Fed to slow down the pace of its rate tightening. Elsewhere, the IMF cut its global growth forecast for next year to 2.7%, from 2.9% in July, and from 3.8% in January, and said that there’s 25% probability that growth will slow to less than 2%. In the euro area, the GDP could rise just 0.5% next year. Forex Market The EURUSD remains under a decent pressure of the strong dollar, and only a soft inflation data from the US could help the euro bears take a pause. In Japan, things are not necessarily better. The USDJPY spiked above the 146 level for the first time in 24 years, and investors couldn’t trade the 10-year JGBs for three days, because the BoJ broke the system by buying just too much of the 10-year bonds to conduct a yield curve control strategy. Swap traders are now betting that the BoJ can’t carry on with abnormally low interest rates for so long, and will be forced to hike its rates at some point. Watch the full episode to find out more! 0:00 Intro 0:37 It’s not time for a gaffe, Mr. Bailey! 3:31 Jamie Dimon sees another 20% drop in S&P500 4:23 But it all depends on US inflation and the Fed policy! 6:27 Intel crops jobs 7:32 IMF cuts global growth forecast 8:04 EURUSD under pressure 8:38 US crude slips below $90pb 8:47 BoJ will soon be forced to act on rates to stop yen depreciation Ipek Ozkardeskaya Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #UK #GBP #gilt #Bailey #Liz #Truss #sovereign #crisis #FOMC #minutes #USD #inflation #PPI #CPI #crude #oil #Intel #IMF #growth #forecast #JPY #BoJ #FTSE #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary ___ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr ___ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 ___ Let's stay connected: LinkedIn: https://swq.ch/cH
Japan: 4Q22 GDP rebounded, but less than expected

It Is Expected, That The Japanese Government Intervenes In The Market At The End Of This Week

InstaForex Analysis InstaForex Analysis 12.10.2022 10:59
On Wednesday morning, the Japanese currency was covered by a strong tsunami caused by the USD. Paired with the dollar, the yen crossed the red line at 145.90 and collapsed to a new 24-year low. The dollar has dispersed Today's culminating event in the foreign exchange market should be the release of the minutes of the September FOMC meeting. Recall that last month, as part of the current tightening cycle, the US central bank raised the interest rate by 75 bps for the third consecutive time and signaled the continuation of an aggressive course in order to curb inflation faster. Now traders hope that the Federal Reserve's minutes will shed light on the central bank's future plans regarding rates. If the report turns out to be more hawkish, it will strengthen expectations for another increase in the indicator by 75 bps. This development is an excellent driver for the yield of 10-year US government bonds. Ahead of the release of the FOMC minutes, the indicator soared to a 14-year high at 4.006%. The jump in yields contributed to the dollar's growth in all directions. At the start of Wednesday, the DXY index rose by 0.16% and tested a 2-week high at 113.54. At the same time, the greenback showed the best dynamics against the yen, which is absolutely logical. Among all the currencies of the Group of 10, the JPY is particularly sensitive to the growth of long-term US bond yields, since the same Japanese indicator is still near zero. The growing monetary divergence of Japan and the United States has led to the fact that this year the yen has sunk against the dollar by more than 20%. And this morning, the yen set another anti-record. The USD/JPY pair jumped by more than 0.3% and touched the level of 146.35. The last time the quote was traded at this level was in August 1998. Is the intervention close? Of course, the fact that dollar bulls crossed the red line again further increased the risk of repeated currency intervention by the Japanese authorities. Recall that the Japanese government intervened in the market for the first time in 24 years three weeks ago, when the USD/JPY pair reached the level of 145.90. Now, when the quote turned out to be much higher than this level, many traders are afraid of a repeat of the September scenario in the near future. However, this time Japanese politicians will most likely not focus on any particular red line. At this stage, the more important indicator will be the rate of change in the exchange rate. This was announced this morning by Japanese Finance Minister Shunichi Suzuki. "If the yen falls rapidly, it will force the Japanese government to push the red button again," Commonwealth Bank of Australia strategist Joseph Capurso shared his opinion. Meanwhile, many analysts warn that in the short term, the dollar's growth may accelerate significantly on all fronts, including against the yen. Today's FOMC minutes is far from the only obvious driver for the dollar. The real rocket fuel for the USD may be tomorrow's release of statistics on inflation in the United States for September. If the market sees that consumer price growth is still steady, it is likely to reignite a wave of speculation about an even sharper rate hike in America. In this case, the dollar may demonstrate another parabolic growth. Then Japan will simply have no other choice but to re-intervene. The yen is doomed anyway According to Kapurso, the Japanese government will intervene in the market by the end of this week. However, as in September, the effect of the intervention will be short-lived. Any fluctuations caused by the intervention of the USD/JPY pair will stop within a few weeks, the analyst is certain. The quote will be able to recover fairly quickly, since the dollar now has very strong support: the Fed's November meeting is ahead, which means the next round of rate hikes. The asset has excellent growth potential in the longer term. Even if in the future the Fed starts to slow down the pace of tightening its monetary rate a bit, the Bank of Japan policy will still remain ultra-soft. This should support the US currency. We expect that the dollar will remain strong at least until next spring, and we maintain our 3-month forecast for the USD/JPY pair at 147.00, Rabobank analysts said.   Relevance up to 09:00 2022-10-14 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. Read more: https://www.instaforex.eu/forex_analysis/324071
Wage agreement may be game-changing in a way. First meeting of the new BoJ Governor Ueda takes place on April 28th

Possible Scenarios Of The US Dollar To Japanese Yen (USD/JPY) Pair

Saxo Bank Saxo Bank 12.10.2022 11:38
USDJPY in steepest trend in 30+ years is facing strong resistance at 147.65, peak from 1998. Trend is stretched and USDJPY is forming a rising wedge top and reversal pattern  USDJPY Earlier this week buyers manage to break and close above the resistance at 145.145 was the 1.618 projection of the July correction.At the time of writing USDJPY is breaking above the peak of the very volatile trading day 22nd September. The energy from that day suggests USDJPY could move to the Fibonacci projection 1.382 at 148 but 1.618 projection at around 149.34 is not unlikely. If that scenario unfolds USDJPY will be testing the upper trendline in what looks like a rising wedge pattern (two black rising lines). Short-term uptrend is a bit stretched indicated by divergence on RSI but the uptrend is intact.   However, as can be seen from the monthly chart there is strong resistance at 147.65. 147.65 is the peak in 1998 and within few cents also the length of the 3rd vawe from 2012 to 2015. The uptrend since 2021 is the steepest and fastest the past 30+ years and it is quite stretched. There is still no divergence on RSI however, but since October is still not over the jury is still out. A possible scenario could be for USJPY to spike above the 147.65 to 148-149 and then exhaust. If USDJPY closes below the lower trendline of the rising wedge on the daily chart it is a strong indication of trend reversal. Break out for wedges usually occurs 2/3 of the way to the apex (where the two lines meet) and we are approximately 60% of the way.If USDJPY closes above the upper trendline this Wedge reversal scenario has been demolished.        Source: https://www.home.saxo/content/articles/forex/ta-usdjpy-12102022
Saxo Bank Podcast: The Bank Of Japan Meeting And More

Japan Is Reopening Its Borders After Three Years, Visa-Free And Agent-Free Travel

Saxo Bank Saxo Bank 12.10.2022 11:54
Summary:  Japan’s relaxation of border curbs and reopening this week is well timed for a potential year-end tourism boom, with upswing in both domestic and international travellers likely. Pent-up demand and a weak yen further help to improve Japan’s position as an attractive destination, although the lack of Chinese tourists will mean that a full recovery has to wait for much longer. Still, there appears to be potential investment opportunity in key travel and tourism related stocks and sectors such as airline, transit services, travel agencies and hotel REITs. The mega border reopening Japan is reopening its borders after three years, allowing visa-free and agent-free travel. Effective 11 October, the Japanese government has effectively removed all border controls that were in place since the Covid outbreak. These include: No visa requirements for foreign nationals entering Japan for business/employment for less than three months, short-stay tourism, and long stays. Visa exemptions will resume for 68 countries/regions No testing or quarantine requirements for visitors from most countries Removed the daily entry cap on new visitors, which was adjusted from 20,000 to 50,000 on 7 September Started to allow unguided package tours for visitors from all, as against only packaged tours that were allowed since June These measures will open the doors to Japan tourism for a world of travellers, especially ahead of the key upcoming year-end travel season. The only obstacle now remaining is potentially proof of vaccination that is still required to enter Japan, while many European countries have removed that requirement as well. Still, given high levels of vaccination rates globally, it is a small obstacle and the intent is clear with PM Kishida pursuing a “living with COVID” policy of weathering the surge in Covid cases without imposing restrictions on businesses or mobility. Domestic tourism to provide a boost There are still a few considerations for Japanese tourists to travel abroad, and the authorities are positioning well to take advantage of that as well. Japanese people are faced with the high cost of travel due to the weak yen and high fuel costs, and the conservativeness makes them hesitant as well with borders just opening up. The government had previously launched a prefectural discount program to promote travel within one’s own prefecture, but from 11 October it has expanded that to a national travel discount program to stimulate nationwide domestic tourism demand, as well as an event discount program that lowers the cost of entrance to events. These two new discount programs are scheduled to run through late December. Pent up demand and weak yen make Japan an attractive tourist destination Even almost a year after Asia started to open up from the pandemic curbs, there is still pent-up demand as most people took the first trip back home and are now waiting to explore. Japan remains the top travel destination for Singaporeans, according to a May 2022 survey by YouGov. Moreover, with the Japanese yen near 24-year lows against the US dollar, and SGDJPY at record highs above 100, the destination is even more attractive for bargain hunters especially with airline prices catching a bid from high demand and high fuel prices. Bank of Japan’s policy divergence to the Fed suggests the weakness in the yen can continue as US yields continue to push further higher this quarter. It is worth noting that Japan’s visitor arrivals tripled to 32 million in 2013-19, when the yen fell more than 20%. Investment opportunities in Asia’s Q4 tourism boom In 2019, Chinese visitors to Japan were almost 10 million, around 30% of the total. Therefore, in the absence of a Chinese border reopening, a full recovery may be some time off. But a weak yen can prop up duty-free spending, covering up for some of the shortfalls created by the lack of Chinese tourists. An overall pickup in travel spending is also likely to be seen in Asia, with many other countries taking mini-steps towards living with Covid and a full reopening. For Japan, this brings investment potential in a range of different businesses. Airport terminals like Tokyo Narita and Haneda can tap into a large share of domestic and international travellers. The Haneda terminal also has a high domestic traffic mix and a 50% or more local resident international passenger base, which can benefit from Japan's pent-up travel demand. Airlines such as ANA and Japan Airlines, as well as railways such as JR West and JR Kyushu could also witness increased passenger traffic, while travel agencies like HIS and entertainment facilities like Oriental Land which operates the Tokyo Disney Resort may benefit as well. Higher hotel occupancy could mean potential upside for hotel REITs such as Japan Hotel REIT. Retail and restaurant chains such as Pan Pacific, Takashimaya, Isetan Mitsokoshi, as well as consumer goods companies such as Shiseido , Kao, Kose may potentially need to wait for the return of the Chinese tourists. Source: https://www.home.saxo/content/articles/equities/japan-potential-tourism-boom-could-bring-investment-opportunities-12102022
Caixin Services PMI Data Has Helped The Chinese Yuan (CNH)

The USD/JPY Risk Profile Has Faded Away In The Face Of The Lack Of Volatility In The Market

TeleTrade Comments TeleTrade Comments 13.10.2022 08:53
USD/JPY oscillates near the 147.00 shore as the risk-off impulse is extremely quiet. Fed minutes and the money market have given a green signal for a third consecutive 75 bps rate hike. Apart from the US CPI, investors await fresh impetus on BOJ’s intervention plans. The USD/JPY pair is displaying a lackluster performance in the Asian session as investors are awaiting the release of the US Consumer Price Index (CPI) data. The asset is oscillating in a narrow range of 146.67-146.90 and is expected to continue the rangebound performance. The risk profile is turning quiet amid the absence of volatility in the market. The US dollar index (DXY) has recovered its morning losses and is attempting to extend its recovery above the day’s high at 113.35. The mighty DXY is expected to remain in the grip of bulls as odds for a fourth consecutive 75 basis points (bps) by the Federal Reserve (Fed) are escalating with sheer momentum. Money market bets indicate that the probability of a 75 bps rate hike announcement is 84%. Wednesday’s keen-jerk reactions by the DXY were comfortably absorbed by the market participants after the release of the Fed policy minutes. Fed policymakers found favoring the continuation of the current pace of hiking interest rates to achieve the agenda of price stability. Also, reaching the targeted terminal rate and sticking to it for an uncertain period is critical to contain the mounting price pressures. On the Tokyo front, odds for intervention in the currency market by the Bank of Japan (BOJ) are skyrocketing. The verdict has strengthened as Japanese Finance Minister Shunichi Suzuki said on Thursday that the government will take decisive action in the FX market if speculative moves are observed in the yen. He further added that volatility is in the consideration of Japanese officials rather than a specific dollar/yen level. Well, volatility in the asset cannot be ruled out as escalating anxiety ahead of the US inflation data will explode and wild moves will be witnessed by the market participants.  
Growth Of The USD/JPY Pair Is Hampered By Resistance

An Ultra-Soft Monetary Policy Of The Bank Of Japan And Its Consequences

InstaForex Analysis InstaForex Analysis 13.10.2022 11:14
The Japanese currency in a perfect storm    The yen continues to experience the most dramatic fall since 1998. On Thursday night, JPY collapsed against the dollar to almost 147. It was pushed to a new low by a dovish speech by the head of the Bank of Japan. The Japanese currency is once again caught in a perfect storm. On the one hand, the yen is now under strong pressure from expectations of more hawkish actions from the Federal Reserve, and on the other hand, the usual dovish mantras of the BOJ. Yesterday, the JPY fell against the greenback to a new 24-year low at 146.80. The release of the US producer price index for September weighed on the dollar-yen pair. The statistics The statistics did not justify the forecasts of economists, who expected an increase of 0.2%. In reality, the PPI rose more - by 0.4%, which increased traders' fears about a more sustainable growth in consumer prices. US inflation data for last month will be released today. The consumer price index for September is expected to show a slight slowdown (to 8.1% year on year). However, let's not forget about the unexpected turn of events last month, when the statistics for August turned out to be worse than expected. This significantly strengthened the hawkish determination of the Fed and caused a jump in the USD/JPY pair. "If the US CPI rises above economists' estimate again, selling of the yen could pick up, making intervention more likely," said Yoshifumi Takechi, an analyst. Recall that in September the Japanese government intervened in the market for the first time since 1998, when the JPY fell against the dollar to 145.90. Yesterday, the yen fell well below this red line and set a new anti-record, but there was no intervention. Now the Japanese authorities have chosen a different tactic, focusing not on a certain price threshold, but on the speed of the JPY fall. US dollar growth is a global problem This was announced on Wednesday morning by Japanese Finance Minister Shunichi Suzuki, and a little later his words were confirmed by BOJ Governor Haruhiko Kuroda. In addition, Kuroda stressed yesterday that the widespread growth of the dollar is a global problem that needs to be addressed together. According to Kuroda, many economies have already come to an understanding of this and are ready to discuss this issue at the meetings of the G20 and the International Monetary Fund, which are taking place these days in Washington. In fact, Kuroda hinted at the possibility of a coordinated intervention against the dollar, but the market ignored his threat. After Kuroda's speech, the US currency, on the contrary, received an even more powerful impetus. By trying to support the yen, the official only made things worse as he couldn't help but make dovish comments. The discrepancies in the monetary policy The head of the BOJ once again confirmed his commitment to an ultra-soft monetary policy and keeping interest rates at an ultra-low level. The main arguments in favor of a dovish strategy are still the same: the Japanese economy has not yet recovered to its pre-pandemic levels, and inflation in the country is still relatively modest compared to the stalemate in the West. Kuroda's comment once again convinced traders that the discrepancies in the monetary policy of the Fed and the BOJ will grow, especially since now the markets expect an increase in rates in America by at least 150 bps by the first quarter of 2023. The Fed will continue its aggressive fight against inflation, and this will help further strengthen the already strong dollar this year. USD/JPY now On Thursday night, the yen hit a low of 146.98 against the dollar, but USD/JPY sank slightly in the morning. At the time of writing, the asset fluctuated within a narrow range of 146.67-146.90. Amid the expectation of a key inflation report in the US, the USD/JPY pair remains upward, but fears of a potential intervention by the BOJ are forcing traders to be cautious. In any case, analysts predict increased volatility of the asset in today's trading. The main target for the bulls will be the level of 147, while the bears need to fall below 146.66 to seize the initiative.   Relevance up to 08:00 2022-10-15 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. Read more: https://www.instaforex.eu/forex_analysis/324191
Wage agreement may be game-changing in a way. First meeting of the new BoJ Governor Ueda takes place on April 28th

How Would Bank Of Japan Determine What Is The Best Time To Intervene And Protect Japanese Yen?

Conotoxia Comments Conotoxia Comments 13.10.2022 12:38
Today's release of US inflation data for September may be the one the markets have been waiting for, since the beginning of the week. In light of these expectations, the situation on the Japanese yen, which has weakened once again to levels not seen in 24 years, seems to be shaping up interestingly, with only a trace left on the USD/JPY chart after the Bank of Japan's latest intervention. Yen exchange rate The Japanese yen has weakened towards JPY147 per USD, being close to the levels of August 1998. The recent weakness of the Japanese currency may be due to the statements of the Bank of Japan Governor, who confirmed the maintenance of loose monetary policy in Japan to support the economic recovery. Haruhiko Kuroda added that Japan's economy is still recovering from the pandemic, and that the Bank of Japan's goal is to keep inflation stable in the region of 2 percent. This approach may mean that Japan and the United States may present two very different approaches to monetary policy. In the U.S., interest rates may continue to be raised, while in Japan they may remain unchanged, close to zero. Source: Conotoxia MT5, USDJPY, MN Another Bank of Japan intervention after inflation data release? Japanese Finance Minister Shunichi Suzuki reiterated today that the government is ready to take "decisive" action to counteract the yen's steep decline, but added that the issue is the dynamics of exchange rate movements, not a specific level. As a result, it is the volatility on the USD/JPY pair that may determine interventions, not where the exchange rate of the pair might be . Nevertheless, with today's release of inflation data from the US, volatility could be elevated. This, in turn, could favor the Japanese authorities' decision to intervene. The Japanese intervened in the currency market last month for the first time since 1998, when the yen weakened to levels not seen in 24 years. The intervention, from which there is no trace now, was expected to cost nearly $20 billion, according to Bloomberg data. US inflation data in focus According to market consensus, US inflation in September on a m/m basis was expected to rise by 0.2 percent, while core inflation was expected to rise by 0.5 percent. Meanwhile, on an annual basis, price growth was expected to be 8.1 percent for CPI inflation and 6.5 percent for core inflation. It is the latter reading that may be particularly important. While CPI inflation may have peaked at 9.1 percent in June, the peak for core inflation at 6.5 percent may be surpassed today. Publication today at 14:30 GMT+2. Daniel Kostecki, director of the Polish branch of Conotoxia Ltd. (Cinkciarz.pl investment service)The above commercial publication does not constitute an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of April 16, 2014. It has been prepared for information purposes and should not constitute the basis for making investment decisions. Neither the author of the study nor Conotoxia Ltd. are responsible for investment decisions made on the basis of the information contained in this publication. Copying or reproducing this work without the written consent of Conotoxia Ltd. is prohibited. Read article on Conotoxia
Wage agreement may be game-changing in a way. First meeting of the new BoJ Governor Ueda takes place on April 28th

Japanese Yen Is Still Quite Weak, Shunichi Suzuki Warns Once Again

Craig Erlam Craig Erlam 13.10.2022 18:46
More u-turns incoming? Equity markets in Europe are marginally higher as bond market concerns ease and we await the latest inflation data from the US. The Bank of England bond market intervention deadline is looming which in recent days has made investors very nervous about a potential sequel to the mini-budget doom loop that forced the central bank to respond initially. Those fears have eased slightly after the BoE made its biggest emergency purchase so far on Wednesday, totalling more than £4.5 billion, in a sign that pension funds are doing as instructed and reducing risk. That comes after the first couple of weeks in which the uptake was very low, prompting some to speculate that this Friday’s deadline would trigger another frenzy. No one is calm yet and I have no doubt that the central bank will step in again if we get a repeat. The view of many though is that we shouldn’t be waiting for that cliff-edge moment, that the central bank should leave the backstop in place until the budget at the end of the month at which point a sticking plaster will hopefully no longer be necessary. What may make things easier for the BoE is more u-turns from the government ahead of the budget and that is what is reportedly being discussed today. There have been rumours of a meeting between number 10 and the Treasury to discuss possible u-turns including on corporation tax which would be another humiliating climb down, albeit one that is boosting the pound which now trades almost 1.5% higher against the dollar today. UK yields are also in retreat on the back of those rumours. US inflation in focus The spotlight will shift from the UK back to the US shortly as we get the latest CPI reading from the world’s largest economy. The FOMC minutes on Wednesday had a slightly dovish tone to them, an indication that some policymakers are becoming less comfortable with the scale of tightening, the economic consequences and perhaps even the risk of overcorrecting. That’s not entirely surprising after numerous very large rate hikes but it does represent a slight shift which will intrigue investors. Coupled with a weaker inflation number today – in particular an improvement in the core reading – investors may sense the end of the tightening cycle is nigh. Policymakers have made clear that it will take more than just one number to sway them but investors have never been ones to wait that long. Despite repeated setbacks, they’ve continued to jump at the first opportunity and I’d be amazed if the same isn’t true today, should the data be favourable. More intervention on the way? Japanese Finance Minister Shunichi Suzuki once again sought to reassure the markets overnight that they remain ready to take decisive action in the FX markets, as the yen trades around 147 to the dollar. This is above where the last intervention took place and marginally below the previous high in 1998. While they continue to stress that it’s about volatility and not price levels, nothing has improved on either front since the last intervention which makes you wonder how long they’ll wait and how forceful they’ll be. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Another wild session - MarketPulseMarketPulse
Wage agreement may be game-changing in a way. First meeting of the new BoJ Governor Ueda takes place on April 28th

The Monetary Divergence Of America And Japan Will Continue To Put Pressure On The Japanese Yen (JPY)

InstaForex Analysis InstaForex Analysis 14.10.2022 11:48
Yesterday, the foreign exchange market experienced a strong storm. At first, the dollar took off like a rocket in all directions, and then it also sharply sprung back. But it still looks good against the yen. The bouncing dollar On Wednesday, the US currency showed another parabolic growth against all its major competitors. The springboard for the greenback was the shocking data on inflation in the United States. Statistics for September showed that consumer prices in America rose more than expected. On a monthly basis, the indicator rose by 0.4% against the forecast of 0.2%. As for the annual dynamics, inflation also exceeded the preliminary estimate of economists and amounted to 8.2%. This is only 0.1% lower than the value recorded in August. The market saw that the growth of consumer prices in the United States is still stable, despite the aggressive anti-inflationary campaign launched by the Federal Reserve this year. This significantly increased traders' expectations about the continuation of the hawkish course in America and the next increase in the interest rate by 75 bps. Moreover, the hot inflation data again provoked a wave of speculation about a possible rise in the indicator in November by a full percentage point. The probability of such a scenario has increased to 13.4%. Optimism about a more aggressive tightening served as an excellent springboard for the dollar. Literally overnight, the DXY index jumped by more than 0.5%. One of the most productive majors was the USD/JPY pair. The quote soared by 0.7% and set another record at 147.665. The last time the dollar traded against the yen at this level was in 1990. However, the USD/JPY pair did not stay at the 32-year high for long. Shortly after the release of the consumer price index, the large-scale triumph of the greenback was replaced by an epic failure of the same power. Analysts explain this by the fact that the market has already fully embedded in the value of the dollar expectations about sustained inflation and its impact on the future course of the Fed. Now a new trigger is needed for the USD to grow steadily, and we will get it soon. Now everyone's focus is switching to the Fed's monetary policy meeting next month. As we approach the moment X, the dollar will grow on strong US economic data. The yen is an obvious loser Despite its recent rebound, the USD/JPY pair still maintains a strong upward mood. This morning, the asset is staying near the 32-year peak reached a day earlier. Even the growing risk of currency intervention cannot weaken the grip of dollar bulls. At the start of Friday, the Japanese government again threatened to intervene in the market if there is a rapid fall in the yen. Recall that last month, for the first time since 1998, Japan intervened in support of its national currency, when it fell against the dollar below the level of 145.90. Given the recent statements of Japanese officials regarding the intervention, it can be assumed that now they will not protect any specific levels. The other day, the Japanese Finance Minister and the head of the Bank of Japan stressed that at this stage the focus is shifted to the rate of change in the exchange rate. According to analysts, this approach can keep dollar bulls only from sudden movements, but in general USD/JPY will remain in a bullish trend. In the future, the asset will move to new price highs quietly for several weeks. Perhaps at some point it will get bogged down in consolidation again, but the upcoming rate hike in the US will not allow it to go into suspended animation for a long time. The monetary divergence of America and Japan, which has already collapsed the yen against the dollar by almost 28% since the beginning of the year, will continue to intensify and put pressure on the JPY. This week, BOJ Governor Haruhiko Kuroda once again reaffirmed his commitment to a dovish monetary exchange rate. He again stressed that he does not consider the current inflation a reason to raise rates, especially since the Japanese economy has not yet recovered from the COVID-19 pandemic and still needs incentives. Kuroda's comment further aggravated the divergence in the policy of the BOJ and the Fed, especially amid the fact that the market is now expecting further tightening in America. This suggests that the yen's downward trend against the dollar will not change in the near future, even if the threat of further interventions will contribute to slowing the growth of the USD/JPY pair.   Relevance up to 09:00 2022-10-19 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. Read more: https://www.instaforex.eu/forex_analysis/324310
Caixin Services PMI Data Has Helped The Chinese Yuan (CNH)

Is Another Intervention Of The Japanese Ministry Of Finance Coming?

Kenny Fisher Kenny Fisher 14.10.2022 12:42
USD/JPY continues to move edge higher and is up 1.6% this week. In the European session, USD/JPY is trading at 147.67, up 0.25%. The Japanese yen is once again on a downswing, after hugging the key 145 line. The dramatic intervention by Japan’s Ministry of Finance (MoF) in September stemmed the yen’s bleeding, but this move by Tokyo appears to have had a very short shelf-life, as the yen fall to new 24-year lows. Intervention anyone? The burning question is with the yen currently lower than when the MOF stepped in, will it again intervene to prop up the Japanese currency? The first intervention clearly didn’t achieve its desired effect of stabilizing the yen below 145 and Japan’s foreign reserves fell by a record amount in September, around 2.8 trillion yen. The game of cat-and-mouse between the MOF and speculators betting against the yen continues, and another currency intervention could be in the works, but it would likely have to be much larger than the first intervention. The MOF could try to send a stronger warning to the markets, but it’s questionable whether unilateral action by Japan will be enough to change the yen’s downtrend. The Bank of Japan has no intention of capping JGB yields and with the Fed likely to deliver another oversize rate hike in November, the US/Japan rate differential will continue to widen and likely weigh on the Japanese yen. The US posted another hot inflation report for September. Headline inflation ticked lower to 8.2%, down from 8.3% but above the consensus of 8.1%. Core inflation rose to 6.6%, up from 6.3% and higher than the forecast of 6.5%. Inflation clearly is yet to peak despite monetary policy becoming restrictive, and the inflation data cements expectations for a 75 basis point hike at the November meeting. . USD/JPY Technical USD/JPY is testing resistance at 147.50. Above, there is resistance at 148.32 There is support at 147.50 and 146.04 This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Caixin Services PMI Data Has Helped The Chinese Yuan (CNH)

The US Dollar To Japanese Yen (USD/JPY) Pair Located At Its Highest Levels Since 1990

TeleTrade Comments TeleTrade Comments 17.10.2022 09:11
USD/JPY retreats from intraday high, prints the first daily loss in nine around 32-year high. Japan PM Kishida assures taking steps to limit speculative FX moves, begin search for replacing BOJ Governor Kuroda. Pullback in yields, light calendar tease sellers around multi-year high. USD/JPY bulls take a breather at the highest levels since 1990, printing mild losses near 148.50 during the early hours of Monday’s European session. In doing so, the yen pair prints the first daily loss in nine amid fears of Japan government’s intervention, as well as amid the Treasury bond yields’ retreat. Recently, Japanese Prime Minister Fumio Kishida mentioned that they “will take steps against speculative FX moves as needed.” Japan PM Kishida also added that rapid forex moves are undesirable. Earlier in the day, the Japanese leader mentioned “Will consider a successor to BOJ Governor Kuroda, taking into account monetary policy foreseeability, coordination with the government.” With this, Japan’s Kishida indirectly strikes the Bank of Japan’s (BOJ) easy money policies and suggests a dislike for the USD/JPY run-up. Also exerting downside pressure on the USD/JPY prices could be the sluggish US Treasury bond yields and the broad US dollar pullback amid a sluggish start to the week. Elsewhere, cautious optimism about the UK’s economy, due to the latest shuffle in the PM’s team, as well as the absence of the market’s wagers on the Fed’s 1.0% rate hike also keep the USD/JPY sellers hopeful at the multi-year high. It should be noted that the Japanese intervention appears imminent and can trigger the much-needed pullback from the highest levels since 1990. However, the pace of the fall depends upon the size and timing of meddling. Even so, the divergence between the monetary policies of the Fed and BOJ can keep the USD/JPY bulls hopeful. Technical analysis A clear pullback from the three-month-old ascending resistance line, at 149.10 by the press time directs USD/JPY sellers towards a three-week-old ascending support line, at 146.30 as we write.
Bank of Japan to welcome Kazuo Ueda as its new governor

Forex: Japanese Yen (JPY) Gathers Interest Again

Craig Erlam Craig Erlam 17.10.2022 22:33
A humiliating blow Another turbulent start to the week, albeit a positive one broadly speaking with equity markets around 1% higher in Europe after a decent start to the week in Asia. Since Liz Truss became UK Prime Minister, uneventful days have eluded us and this week has also got off to another hectic start. While the Prime Minister had every intention of making waves in her first weeks in charge, she clearly didn’t anticipate the storm that was brewing and I’m sure she more than anyone at this point would do just about anything for a more peaceful few weeks. Read next: Netflix Stock Price May Tumble Tomorrow! What Can We Expect From NFLX Earnings? | FXMAG.COM Assuming she lasts that long, of course. The u-turn this morning was even more historic than the initial mini-budget. A humiliating moment after a chaotic period for Truss in which confidence in her in the markets, the public and her own party, it seems, has been decimated. That said, we are seeing some improvement from a market perspective. It just took reversing almost all of the unfunded tax cuts to achieve it. Who’d have thought? The job isn’t done yet though, the new Chancellor has done what was necessary now but the harder decisions arguably come later this month in the budget. How low can it go? The yen is continuing to slide against the US dollar, hitting 148.89 this morning and trading beyond the level the country intervened at in 1998 and, of course, last month. We’ve had the usual plethora of commentary from various officials overnight; “high sense of urgency”, “ready to act” etc. It does seem only a matter of time until we get another powerful intervention in the FX markets, it’s just a question of what they’ll do differently this time as doing the same again every few weeks simply isn’t sustainable. The question is whether the yen will surpass 150 against the dollar first. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. The mother of all U-turns - MarketPulseMarketPulse
Market Focus: European Data Releases, ECB Survey, US FOMC Minutes, and UK Bond Supply

Across The Forex Board, The New Zealand Dollar (NZD) Emerges As The Strongest

TeleTrade Comments TeleTrade Comments 18.10.2022 09:20
Here is what you need to know on Tuesday, October 18: The US dollar resumes its bearish momentum on Tuesday, having lost the recovery momentum in the Asian session, as risk flows extend into the second straight day following the UK's dramatic U-turn over the tax-slashing mini-budget. The US S&P 500 futures, the risk barometer, is gaining roughly 1.70% so far while the Asian indices rally 1.20% to 1.80%, led by the rebound in the Chinese stocks. In early dealing, China’s stocks turned south after the country’s junk dollar bonds dropped to a record low, as a property market crisis sparked by a crackdown on excessive borrowing. Meanwhile, Chinese traders digested comments from US Secretary of State Antony Blinken. The US official said on Monday, China has made a decision to seize Taiwan on a “much faster timeline” than previously thought. Across the fx board, the Kiwi dollar emerges as the strongest heading into the European open, followed by its Antipodean partner, the aussie. Meanwhile, the yen pulled away from 32-year highs above 149.05 against the US dollar, dragged lower by weaker Treasury yields and Japanese verbal intervention. Top Japanese officials continued their jawboning, reiterating that they are ready to take necessary steps to avoid undesirable, as they watch the FX price action with a sense of urgency. USD/JPY was last seen trading around 148.85, consolidating the upside before the next push higher. NZD/USD surges over 1% to challenge 0.5700, as hotter New Zealand’s Q3 Consumer Price Index (CPI) ramped up bigger RBNZ rate hike expectations. NZ inflation rose by 2.2% QoQ in the third quarter, beating expectations of a 1.6% increase. Meanwhile, the annualized inflation eased from a 32-year high of 7.3% to 7.2%, although outpaced expectations of +6.6%. Hawkish comments from RBA Assistant Governor Michele Bullock and RBA minutes underpin the sentiment around the AUD/USD pair, as they suggest the need for more rate increases in the coming months. EUR/USD also capitalized on retreating Treasury yields and a renewed broad-based US dollar selling, having recaptured the 0.9850 barrier. Although bulls remain cautious ahead of the German and Eurozone ZEW sentiment surveys. Germany’s Economy Minister Robert Habeck said on Monday that “with fiscal policy in place, they can avoid deep recession in Europe without fuelling inflation.” GBP/USD is fading an uptick above 1.1400, as investors assess the Financial Times (FT) report that stated the Bank of England (BOE) is set to delay quantitative tightening (QT) worth £838bn until bond markets calm. The report comes after the new UK Chancellor Jeremy Hunt ditched almost all of the mini-budget announced by PM Liz Truss on September 23. The gains in cable appear short-lived, as PM Truss braces for political challenges, with Tory backbenchers preparing to oust her. Gold is holding its recovery momentum above the $1,650 barrier but is likely to remain in a defined range until buyers reclaim the critical $1,670 hurdle. The softer dollar keeps lending support to the metal. Bitcoin price is gradually pushing higher while above $19,500 but bulls stay cautious amid a wall fall of healthy resistance levels on a daily timeframe.
FX Daily: Upbeat China PMIs lift the mood

The 20th Party Congress Is More Important For China Than Publishing Data

ING Economics ING Economics 18.10.2022 11:00
China's 20th Party Congress remains in focus - delays to data  In this article Macro outlook What to look out for: RBA minutes and China's Communist Party Congress Source: shutterstock Macro outlook Global markets: US stocks erased their losses from Friday’s session, opening higher and then trading quite flat until the close. The S&P500 rose 2.65% and the NASDAQ was up 3.43%. Falling bond yields may have helped restore some confidence, and this may have been helped by tailwinds from the UK Gilts market, where new Chancellor, Jeremy Hunt, took an axe to the previous mini-budget and put the UK’s finances on a sounder footing. 30Y UK Gilt yields fell 40.2bp, the 10Y dropped 35.7bp and 2Y Gilt yields declined by 33.3bp. 10Y European government bond yields declined by about 8bp on average, while the 10Y US Treasury yield was down just 0.8bp. Equity futures suggest that the positive tone will persist into today’s trading, and this could help lift the EUR further. EURUSD rose to 0.9843 yesterday from about 0.972 and could be buoyed further if risk sentiment holds up. The AUD is trading just below 63 cents, after touching 0.6189 briefly yesterday. Cable has recovered all the way to 1.1356, though it looked as if it might hit 1.145 at one point yesterday. But the JPY seems to be looking at further weakness, missing out on the G-10 rallies, and edging ever closer to 150. The BoJ will be getting anxious after their recent jawboning seems to have fallen on deaf ears.  Asian FX has lagged behind the G-10 rally, and will likely pick up the slack today. Yesterday, the VND was the weakest of the Asia pack, dropping as the central bank widened the trading band to 5% (from 3%) on either side of the fixing rate. G-7 Macro: It is very quiet on the G-7 calendar today. Germany’s ZEW business survey is probably the main pick of the day. The expectations component of the survey is not far above the Global Financial Crisis low of -63.9, and could well push below that today. The consensus expects it to fall to -66.5. China: There are some delays to the economic data scheduled for release during the Party Congress. These include the customs export and import numbers, which were scheduled for release yesterday, as well as GDP, retail sales, industrial production, and fixed asset investment, which were previously scheduled for release today. We aren't concerned that the release in the data is because it is particularly weak. Although we don’t expect it to paint a particularly positive picture of the Chinese economy when it is eventually released. Rather, the delay suggests that the government believes that the 20th Party Congress is the most important thing happening in China right now and would like to avoid other information flows that could create mixed messages.   What to look out for: RBA minutes and China's Communist Party Congress New Zealand inflation (18 October) Australia RBA minutes (18 October) China GDP and activity data (18-31 October) US industrial production (18 October) Malaysia trade balance (19 October) US building permits and housing starts (19 October) Fed’s Bostic and Kashkari speak (19 October) Japan trade balance (20 October) Australia labour market data (20 October) China loan prime rate (20 October) Taiwan export orders (20 October) Bank Indonesia policy meeting (20 October) US initial jobless claims (20 October) Fed’s Evans, Bullard and Kashkari speak (20 October) New Zealand trade balance (21 October) Japan CPI inflation (21 October) South Korea advance trade data (21 October) Fed’s Jeferson, Cook and Bowman speak (21 October) TagsEmerging Markets Asia Pacific Asia Markets Asia Economics   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Saxo Bank Podcast: The Bank Of Japan Meeting And More

The Next Monetary Intervention By The Japanese Government Would Have To Be Much Larger Than The First One

Kenny Fisher Kenny Fisher 18.10.2022 12:39
USD/JPY has edged higher today and is currently trading at 149.17. The yen has fallen for eight straight sessions, losing 500 points in that time. Yen slide continues The yen continues to set new 24-year-old lows as the dollar/yen has pushed above the 149 line. This is a higher level than when the government intervened last month, which marked the first intervention since 1998. Officials have reacted to the yen’s latest slide with familiar verbal rhetoric. Bank of Japan Deputy Governor Masazumi Wakatabe has said that the yen’s recent fluctuations were “clearly too rapid and too one-sided”. Wakatabe added that there was no contradiction between currency intervention to prop up the yen and the BoJ’s ultra-low interest rate policy, which has been the driver of the yen’s poor performance this year. Prime Minister Kishida said on Saturday that the BoJ would have to maintain policy until wages rose, and the BoJ has not shown any signs of rethinking its policy, even with the yen sliding and inflation remaining above the central bank’s target of 2%. Japan’s core CPI rose 2.8% in August, the fifth straight month that it has exceeded the 2% level. The key question is whether the government again step in and intervene in the currency markets. The first intervention clearly didn’t achieve its desired effect of stabilizing the yen below 145 and Japan’s foreign reserves fell by a record amount in September, around 2.8 trillion yen. The game of cat-and-mouse between the government and speculators betting against the yen continues, and another currency intervention could be in the works, but it would likely have to be much larger than the first intervention in order to have a more lasting effect. . USD/JPY Technical USD/JPY faces resistance at 150.04 and 151.32 There is support at 148.85 and 147.58 This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Alphabet Reports Strong Q2 2023 Results with Growth in Advertising and Cloud Services - 24.07.2023

The Australian Dollar (AUD) Did Not Do Well | Bitcoin Is Still Showing Resilience

Craig Erlam Craig Erlam 18.10.2022 12:45
Asian stocks were flashing green on the second day of trading, while Europe is poised to open in a similarly positive manner as sentiment continues to improve, albeit from very low levels. There’s still a strong feeling of a bear market rally about trading over the course of the last week. From the post-US-inflation rebound to what has now been a strong start to the week – in part driven by the UK’s decision to no longer shoot itself in the foot – nothing about this screams sustainable. Of course, the last couple of months have been tough for equity markets since peaking towards the end of the summer and a rebound of some kind was going to happen eventually. I’m just not convinced there’s much substance behind it as the economic landscape looks treacherous and we don’t even know if we’re at peak inflation and interest rate pricing yet. Those are substantial headwinds that will make any stock market rebound extremely challenging. RBA concerned about the outlook as it slows the pace of tightening The RBA minutes, along with comments from Deputy Governor Michele Bullock alluded to the outlook as contributing to the decision to slow the pace of tightening at the last meeting to 25 basis points. While the central bank will continue to hike rates in order to fight inflation – highlighting the broad-based pick-up in prices and higher wages – it’s clearly uneasy about the economic consequences and the lags in policy after hiking rates 2% over the course of four months since the summer. The Aussie dollar has not performed well in that time, falling around 15% from its June highs against the greenback, although it has rallied a little overnight. When will Japan intervene again? The yen remains under pressure despite desperate attempts by Japan to influence the currency markets through direct and verbal intervention. Last month’s intervention was substantial but short-lived and the commentary before and after has fallen on deaf ears. Overnight there was more of the same – “a high sense of urgency”, “will take appropriate action decisively” – and even a refusal to comment on whether the Ministry of Finance is conducting “stealth FX intervention”. If it is, it isn’t working particularly well, with the yen now very close to 150 against the dollar, a level that may make traders a little nervous. Another big intervention may soon be on the cards, although Japanese officials may be uneasy about the limited effectiveness of the last. What more can and will they do? The environment remains challenging Bitcoin has its sight set on $20,000 once more as it continues to bounce back from last week’s plunge. The sell-off occurred around the release of the US CPI data which could have sent it spiralling lower but risk appetite more broadly quickly bounced back and so did bitcoin. Whether it can continue to do so unless sentiment improves more sustainably is another thing. It continues to show resilience around $18,000 – $20,000 where it’s traded for most of the last couple of months but that may not be enough if risk appetite worsens again. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Supply Trends Resurface: Analyzing the Impact on Market Dynamics

AUD/NZD - Reserve Bank Of Australia Minutes Trigger Discussion About The Rate Hikes, So Does New Zealand CPI Data

John Hardy John Hardy 18.10.2022 23:35
Summary:  We have seen some wild swings in risk sentiment in recent days, with the USD first jerked one way and then the other, all while the JPY continues to fall broadly and set new lows versus even a shaky US dollar today as it appears Bank of Japan governor is willing to go down with the YCC ship and longer US treasury yields remain pinned near the cycle highs. Elsewhere interesting relative moves in Aussie and kiwi overnight on dovish RBA minutes and a hot NZ CPI print. FX Trading focus: Whiplash for USD traders, JPY continues plunge. Yesterday saw a bizarre melt-up in risk sentiment that took the USD down a few notches. There was no readily identifiable trigger for the sentiment shift yesterday, which could be related to heavy derivatives exposure and stretched sentiment. Even for the relatively near term, it is hard to see a meaningful USD turnaround without anticipation that the Fed is set to ease up on its tightening message, with the chicken-and-egg dilemma that it will likely only do so once employment indicators (badly lagging) are headed clearly south. A considerable portion of the USD weakness yesterday was against sterling, with GBPUSD managing to back all the way up above 1.1400 in late trading. Sterling even made a bid at breaking through pivotal levels in EURGBP, although that move has been corralled for now (low near 0.8575 – trading well above 0.8700 as of this writing). It is interesting to see headlines attributing the latest sterling surge to FT sources indicating that the Bank of England will delay any attempt to do QT for now (The BoE pushed back against that story this morning). Sure, the recent sterling recovery was achieved as the new UK Chancellor reversed most of Truss’ budget-busting initiatives, and on the Bank of England bringing emergency liquidity and indicating it would be will to hike as much as necessary to stabilize markets at the next meeting. When you ease the liquidity crisis in the proverbial burning theater, sterling can stabilize. Stabilization will not necessarily lead to a strong new rally. As for the QT, it would be a sign of ongoing fragility if the BoE was to fail to carry out any QT for now, not a source of sterling strength. We may have seen the top in GBPUSD here unless this strange melt-up in risk sentiment extends. Elsewhere, interesting to note that despite a weak US dollar yesterday and into this morning, the Japanese yen remains resolutely weak, with new highs in JPY crosses and even USDJPY again today (although possible signs of intervention as I am writing today’s report – more in the chart discussion below). Bank of Japan governor Kuroda remains unmoved, arguing for no change in policy once again overnight and saying that inflation would eventually fall back even if currency weakness risked aggravating inflation levels and telling a lawmaker who asked that he resign that he has no plans of quitting. Have to believe the next round of intervention may be coming up soon for JPY crosses, but speculators may be smelling blood after the prior round failed to impress beyond a few hours, as noted below. Chart: USDJPYIn posting a USDJPY chart today, I was originally going to ask whether intervention is on the way, given we were posting new highs in USDJPY this morning and nearing the 150.00 level. Then, what might be intervention or what might be a nervy market over-reacting to large transactions materialized suddenly, with all JPY crosses dipping suddenly and violently, only to recover much of the lost ground within minutes. Official intervention would more likely have driven a larger move. Let’s recall what happened the last time the BoJ intervened a few weeks ago, when USDJPY challenged above the important 145.00 area resistance at the time: an initial low was posted within an hour just below 141.00 and then a few hours later that low was slightly exceeded before the rebound back to more or less unchanged within two days. Working against the intervention efforts was a fresh rise in global bond yields at the time – a factor that will continue to overwhelm any intervention efforts as long as long yields stay here or run higher still. But safe to say that the threat of official intervention makes tactical trading a risky business. Source: Saxo Group An interesting session overnight for AUDNZD as the RBA minutes highlighted concerns that the steep pace of rate tightening in this cycle will heavily impact the Australian consumer, particularly as floating rate mortgages reset in the months ahead. In New Zealand, the release of the much hotter than expected Q3 CPI data jolted RBNZ rate expectations sharply higher, with solid odds now for the first 75 basis point move for the cycle from the RBNZ next month. AUDNZD pounded lower overnight, trading well below 1.1100 at times, but I wonder how much more the market can get out of this correction. I still see the relative current account trajectory as an important factor – will look for support to come in soon as the rate spread likely can’t get much more stretched in the kiwi’s favour and shouldn’t matter that much in the mix anyway. Table: FX Board of G10 and CNH trend evolution and strength.Awaiting the USD status again after this latest sell-off as the secular rally remains intact – would have to see above 0.9900 and even parity in EURUSD and USD weakness elsewhere to suggest a larger scale consolidation afoot. Note the CNH level in USDCNH terms as the action remains pinned in the 7.20+ area there and USDJPY applies further pressure to USD/Asia. Source: Bloomberg and Saxo Group Table: FX Board Trend Scoreboard for individual pairs.Interesting to see if GBP rolls over now to weakness in GBPCHF, EURGBP and GBPUSD terms. GBPUSD just flipped to positive as of yesterday’s close, but hasn’t broken above 1.1500 resistance – the chart is neutral within this range and tilts more negative back below 1.1000 again. Elsewhere, NOKSEK could be set for a challenge lower after an interesting sell-off today – trend is neutral and awaiting new momentum. Source: Bloomberg and Saxo Group Upcoming Economic Calendar Highlights 1215 – Canada Sep. Housing Starts 1315 – US Sep. Industrial Production 1400 – US Oct. NAHB Housing Market Index 1600 – ECB's Schnabel to speak 2130 – US Fed’s Kashkari (voter 2023) to speak Source: FX Update: Whiplash for USD traders, JPY remains in dumps. | Saxo Group (home.saxo)
The Australian Market Has Seen Growth | Mercedes-Benz Launches New EV

The Australian Market Has Seen Growth | Mercedes-Benz Launches New EV

Saxo Bank Saxo Bank 19.10.2022 09:48
Summary:  Better-than-expected corporate results boosted US stocks for the second day. Afterhours Netflix shares rose 14% on reporting better than expected results. Oil prices fell 3% with the US said to release more strategic petroleum reserves on supply concerns. Gold advanced. Floods hampered commodity production numbers in Australia. RBA notes loan arrears and insolvencies are rising. Mercedes-Benz launched new EV models that rival Tesla’s Model Y. Rio Tinto sees lithium tightness. What’s happening in markets?   The Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) indices rally for the second day  US stocks extended their gains in choppy trading, with the S&P500 gaining 1.1% and now up 3.8% in two days after continuing to rebound from nearly oversold levels, before closing at 3,719.98 points (its highest level in 8-days) on better-than-expected corporate results. All 11 sectors of the S&P500 gained, with Industrial, Materials, Utilities, and Financials leading. Defense giant, Lockheed Martin (LMT:xnys) shares gained the most since 2020, up 8.7% after its earnings per share topped estimates. Goldman Sachs (GS:xnys) rose over 2%, with stronger trading results helping the investment bank beat quarterly earnings and revenue expectations. Goldman’s results continued a strong stretch of bank earnings, including beats from Bank of America (BAC:xnys) and Bank of New York Mellon (BK:xnys) on Monday, with the financial sector outperforming on Tuesday. Meanwhile, Afterhours, Netflix (NFLX:xnas) shares rose 14% after reporting better than expected results, adding 2.4 million customers in the 3Q, beating expectations. The rally was also supported by the Bank of England calming nerves saying, the funds whose vulnerabilities also fueled the rout in UK markets have now raised tens of billions of pounds in capital, and as such are on a more sustainable footing. U.S. treasury (TLT:xnas, IEF:xnas, SHY:xnas) ended Tuesday little changed Treasuries finished a choppy session with yields largely staying near the levels from the day before. The 2-year yield was 1bp richer at 4.43% and the 10-year yield was unchanged at 4%. U.S. economic data were mixed with stronger industrial production in September but a below-expectation read in the NAHB Housing Market Index. Contrary to a Financial Times report suggesting the Bank of England would delay its quantitative tightening program, the U.K. central bank announced later in the day that it will start bond sales on Nov 1 but not including long-dated bonds initially. Australia’s ASX200 (ASXSP200.1) rises 0.3%, with lithium stocks charging, while energy companies retreat after the oil price fell 3%. The Australian share market trades 0.3% higher on Wednesday (1.5 hours into the seesion) with lithium stocks like Pilbara Minerals, (PLS), Allkem (AKE) up over 3% (for more on lithium see below). Meanwhile, the energy sector is capping broad market gains, with selling in oil stocks taking the energy sector down 1.6% after the oil price fell 3.1% to $82.82, with the US said to release emergency crude on supply concerns. Meanwhile losses in oil stocks are somewhat limited with OPEC+ members defending their supply cuts, saying they are justified by the growing risk of a global recession. Woodside (WDS) trades 1.7% down. Beach Energy (BPT) is down the most in the sector, 4.6%, after reporting production dropped amid flooding. The best performing stock on the ASX this year, Whitehaven (WHC) trades 2.2% lower today after announcing production fell 37% last quarter, with total equity sales down 32% compared the June quarter. Whitehaven Coal’s CEO said he sees demand for high quality coal continuing to outstrip global supply, which will likely continue to support coal prices. The coal price has fallen 3% this month, and is now down 15% from its all-time high. Meanwhile, gold stocks are also in focus after Gold prices steadied after the US dollar continued to fall. However St Barbara (SBM) shares are 6.2% lower after the miner cut its gold output forecast for the year, which disappointed analysts. Hong Kong’s Hang Seng (HSIV2) China’s CSI300 (03188:xhkg) Hong Kong stocks rallied, with Hang Seng rising 1.8%, following the move higher in U.S. equity index futures on reports that the Bank of England was delaying its quantitative tightening due to start at the end of October. The Bank of England denied the story later. HSBC (00005:xhkg) and Standard Chartered (02888:xhkg) gained more than 2.5%. BYD (01211:xhkg) surged 6.4% after the leading EV maker said its Q3 profit was set to rise as much as 365% Y/Y, lifting most other EV makers 3%-5% higher in share prices as well. Healthcare names surged again, with Ali Health (00241:xhkg) up 9.4%, Hansoh Pharmaceutical (03692:xhkg) up 5.9%, CSPC Pharmaceutical (01093:xhkg) up 4.5%, Sino Biopharmaceutical (01177:xhkg) up 4% and some biotech stocks soared more than 10%. Chinese airlines stocks gained from 2% to 3% after some Chinese airlines, including China Eastern Airlines and China Southern Airlines, announced the resumption of some more international flights. CSI300 ended a choppy session losing 0.2%. USDJPY climbed to 149.37, the highest level since 1990, and oil price fell to USD83.70 The Yen weekend to 149.37 with the 150 figure in sight. EURUSD, at 0.9850, and GBPUSD, at 1.1330 were little changed from Monday. NZDUSD was the notable outperformer among the G10 currencies, rising to 0.5690 while USDCAD underperformed as oil prices slumped, WTI crude fell 2% to USD83.70 on the report that the Biden administration has approved to release of more strategic petroleum reserves. What to consider? Stronger-than-expected industrial production but a softer NAHB Housing Index U.S. September industrial production came in at +0.4% M/M, (vs consensus: 0.1%, Aug: -0.1% revised) and capacity utilization increased 0.2pp to 80.3%. NAHB Housing Market Index fell to 38, below 43 expected and 46 in August. RBA sounds alarm that rate hikes could soon pause with loan arrears and insolvencies rising The Aussie dollar rose for the 3rd day after the after the USD continued to lose strength when the UK re winded some tax cuts. However, the outlook for the Australian dollar against the US remains restricted, with the RBA noting loan arrears and insolvencies have picked up in Australia. Yesterday's RBA Meeting Minutes highlighted the RBA has little room to rise rates, without compromising the health of the economy. The RBA was only able to raise rates by 0.25% this month, as business insolvencies had picked up, plus a low level of loan arrears were seen, while housing loan commitments declined -  ‘demonstrating the effect of high interest rates on housing’. Lithium sector news; Mercedes-Benz launches new EV that rivals Tesla’s Model Y. Rio Tinto sees lithium tightness Mercedes-Benz (MBR) broadened its electric vehicle range on the eve of the Paris car show; unveiling a new sporty vehicle that’s US$4,300 cheaper than Tesla’s Model Y, with Mercedes selling the EQE SUV later this year for US$68,000. The new sporty EV Merc also has a 590 kilometres range, means it travels 76 kilometres more than Tesla’s Y Model. Mercedes also plans to offer EV versions of all of its vehicles by the end of this year. And aims to only sell EVs by 2030, particularly in markets phasing out fuel engines. Also in Lithium news yesterday, Rio Tinto (RIO) said the lithium market is experiencing tightness, while demand continues to strengthen from government policies, and EV producers rolling out new models. Lithium carbonate prices remained elevated in the quarter after Power rationing in China’s Sichuan province (a key lithium supply hub) also led to production cuts. Also, Australia’s biggest pure play lithium company Pilbara Minerals (PLS) sold spodumene concentrate at a new record high price, equating to $7,830 a ton.     For our look ahead at markets this week - Listen/watch our Saxo Spotlight. For a global look at markets – tune into our Podcast. Source: https://www.home.saxo/content/articles/equities/market-insights-today-19-oct-19102022
Kuroda Stayed On The Sidelines And The Yen Responded With Losses

Investors Are Not Afraid Of A Second Japanese Intervention

InstaForex Analysis InstaForex Analysis 19.10.2022 12:02
JPY continues to slowly but surely fall in price against the USD. The risk of intervention keeps the dollar bulls from sharp movements so far, but soon the yen may be in the epicenter of a hellish funnel. The dollar is pushing Since January, the yen has fallen against the US currency by more than 23%. The reason for such a sharp drop lies on the surface: the Bank of Japan remains true to the dovish policy, and the Federal Reserve has taken an active hawkish stance this year. To curb the record high inflation that hit America, the Fed has already held 5 rounds of interest rate hikes since March. Moreover, the indicator was raised by 75 bps three times. In light of the latest higher-than-expected US inflation data, the market expects the central bank to announce another 75 bps rate hike in November. The probability of such a scenario is estimated by traders at almost 100%. This provides strong support for the greenback, especially when paired with the yen. The Japanese currency looks very hurt right now, as it feels additional pressure from the BOJ. The head of the BOJ literally drowns the yen every day with his marginal comments. This happened yesterday as well. BOJ Governor Haruhiko Kuroda once again confirmed his determination to stick to an ultra-soft policy, despite the total tightening trend. He stressed that the central bank will maintain its status quo until the nature of inflation in the country becomes stable. The combination of hawkish sentiment from the Fed and dovish statements from the BOJ pushed the USD/JPY pair to a new record. On Wednesday night, the dollar tested another 32-year high against the yen at 149.395. Japan clenching its fists The main goal for dollar bulls right now is the key mark of 150. However, as we approach it, the risk of foreign exchange intervention by the Japanese authorities increases significantly. Not a day goes by without Japan accusing speculators of overshooting the yen and threatening them with re-intervention in the market. Recall that in September, the Japanese government for the first time in 24 years decided to support its national currency and carried out a large-scale intervention. Some analysts believe that fear of a repeat of this scenario is keeping dollar bulls from hitting the psychologically important 150 threshold. According to many traders, the red line is at this level. However, the Japanese authorities have repeatedly stated that they will be forced to press the button not by any specific mark, but by the rapid fall of the yen. Be that as it may, the 150 barrier still remains unassailable for bulls on the USD/JPY pair. And there is one curious opinion why this happens. Currency strategists at Bloomberg suggest that it is not at all the caution of investors who fear repeated intervention. The reason for this is the covert interventions that Japan is already carrying out with might and main. Experts were prompted to such an idea by sudden surges in the strengthening of the yen, which have already been noted twice in the past few days. For example, yesterday the JPY showed a slight recovery for no particular reason. Analysts believe that this was the result of the intervention. Recall that last month Japan's Vice Minister of Finance for International Affairs Masato Kanda warned of possible covert interventions. Such a move usually involves intervention in the market on a smaller scale, which is difficult to detect. USD can no longer be contained Hidden or officially recognized, insignificant or as large as last time, any intervention from Japan is no longer able to change the downward trend in the yen. Traders are well aware of the strong bilateral support the dollar currently has against the Japanese currency: the BOJ continues to go dovish, and the Fed may well accelerate even more on its hawkish path. That is why many analysts do not even doubt that in the next few days the USD/JPY pair will finally break through the resistance at around 150. And as we approach the Fed's November meeting, the asset is likely to open a new breath. If the market's hawkish expectations rise, the yen risks entering another tailspin.   Relevance up to 07:00 UTC+00 Company does not offer investment advice and the analysis performed does not guarantee results. Read more: https://www.instaforex.eu/forex_analysis/324712
Caixin Services PMI Data Has Helped The Chinese Yuan (CNH)

Japanese Yen (JPY) Has Been At Its Lowest Since 1990

Kenny Fisher Kenny Fisher 19.10.2022 14:22
USD/JPY continues to inch upwards and is trading at 149.69, up 0.31%. Yen closing in on 150 The yen hasn’t managed a winning session since October 4th and it’s looking likely to breach the symbolic 150 level, perhaps before the week is over. The yen hasn’t traded at such low levels since 1990 and a turnaround from its prolonged slide doesn’t appear likely. The Bank of Japan has been under pressure to rethink its ultra-loose policy, as the yen has plummeted and inflation has climbed above the Bank’s 2% target. Earlier today, BoJ member Seiji Adachi poured cold water on hopes that the BoJ will change course, saying that risks to the economy and volatile financial markets precluded any shifts towards monetary tightening. Governor Kuroda echoed this stance, saying that the weak economy required massive stimulus. The BoJ has fiercely defended its yield curve control, maintaining a cap of 0.25% on 10-year government bonds. What about the yen’s downturn? With the BoJ defending its policy, the ball is in the court of the Ministry of Finance (MoF). The MoF dramatically intervened in late September to prop up the yen after it fell below 145, but the move did little more than slow the yen’s descent for a few days. Another intervention is possible, but it would have to be on a larger scale to have any substantial effect on the exchange rate. Finance Minister Suzuki has warned that the government would “properly respond” in the currency markets, but increasingly, the verbal bullets out of Tokyo are being viewed as blanks. Japan releases Core CPI for September, which is expected to rise to 3.0%, up from 2.8% in August. Inflation has been moving steadily higher, but the release is unlikely to have any effect on the BoJ’s monetary stance. . USD/JPY Technical USD/JPY is putting pressure on resistance at 149.81. Above, there is resistance at 151.32 There is support at 149.09 and 147.58 This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
At The Close Of The New York Stock Exchange 728 Securities Closed In The Red

Netflix's Results Will Be A Hit On The Wall Street | The Bank Of England (BoE) Will Have To Be Very Aggressive

Craig Erlam Craig Erlam 19.10.2022 14:34
Trading is mixed in Europe on Wednesday, with Wall Street eyeing a slightly stronger open amid bumper Netflix earnings. Netflix is a hit Netflix results are expected to be a hit on Wall Street when the bell rings on Wednesday, with pre-markets pointing to a more than 13% rally in the stock. The streaming company reported revenues and earnings that comfortably surpassed expectations, while subscriber growth more than doubled forecasts. That was largely driven by the Asia-Pacific region which will become increasingly important for growth in the coming years. The company will continue to crack down on password sharing going forward, while the ad-supported plan will hope to draw in additional subscribers. After a tough year, things may be looking up for Netflix. UK inflation back in double-digits Inflation in the UK surpassed 10% again in September, slightly beating market expectations and further fueling concerns about the cost of living crisis and the role of the Bank of England in reining in rapid price increases. Naturally, all of this has been complicated by the political soap opera over the past few weeks, something the new Chancellor, Jeremy Hunt, has sought to calm by abandoning almost the entire controversial mini-budget. But inflation is still a problem, regardless, and the BoE will have to be very aggressive at upcoming meetings in order to try and get a grip of it. Markets are now undecided between a 75 and 100 basis point hike on 3 November but are quite confident that Bank Rate will end the year at 4% either way. With inflation now broad-based and fuel even offsetting some of the larger price increases, the worry is that these forecasts may prove too optimistic. ​ Intervention talk ramps up as USDJPY nears 150 Japan remains in focus as the dollar closes in on 150 against the yen. The threats of intervention have been coming thick and fast and many are wondering if 150 could be the point at which the Ministry of Finance pushes back once more. The last intervention wasn’t particularly successful, with the benefits unwinding in a matter of days. The question now is when they’ll jump back in and how forceful they’ll be. The message is clearly falling on deaf ears at the moment. Continuing to fluctuate Bitcoin continues to consolidate, with the recent rebound failing once more around $20,000. That level was once believed to be hugely significant as support but the reality is that it has simply become the point at which the price fluctuates around. That will change eventually but we’re now two months into that broadly being the case so there’s little to suggest it’s imminent. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
China: PMI positively surprises the market

People's Bank of China Loan Prime Rate Stays Unchanged | A Softer Labour Market In Australia |Eyes On The US - Philly Fed Manufacturing Index

Kamila Szypuła Kamila Szypuła 20.10.2022 10:56
This morning, reports from Asia and the Pacific appeared. Traders also are now looking at macro data from the US - Philly Fed Manufacturing Index, the usual weekly data on initial unemployment claims, and data on existing home sales. Japanese Trade Balance (Sep) Japan provided data on exports and imports, and thus on its balance sheet, at the start of the day. The current reading is positive and shows an improvement in the trading result. The current reading is higher than the pronosed -2.167.4B and is at the level of -2.094.0B. For more than a year, Japan has been importing more than exporting, and since May the situation has worsened significantly. The balance then decreased from the level of -842.8B to the level of -2,384.7B. In the following months, the result was above the level of 1,000.0B. This situation is unfavorable for the country, so the current positive reading has a significant impact on the Japanese currency (JPY). Source: investing.com This positive trade result was largely influenced by the positive export performance. The published report shows that exports increased from 22% to 28.9%. He was taller than expected. This is the lowest result during the year. Source: investing.com Australia labor maket reports Australia today presented the result on the appearance of the labor market. The number of employees and the unemployment rate are instances of the country's conditions in this sector. Despite a rebound from the negative area in the previous reading, the number of people employed in September fell to 0.9K. The index scores for the year are generally in a downward trend. The decline will begin in the first half of the year, and the lowest level was in April at 4.0K. It then doubled and the annual peak was at 88.4K. The unexpected drop below zero occurred in the month following the highest score. Therefore, the positive reading from the previous period was significant for the economy. The current reading may weaken not only the economy but also the Australian dolar (AUD). Source: investing.com People's Bank of China Loan Prime Rate The positive news for the Australian labor market is that the unemployment rate remains at 3.5%. Another reading showed that this indicator holds up once again. People's Bank of China Loan Prime Rate will remain at 3.65% for the third time. EU Leaders Summit The most important event of the day for europe is Leaders Summit . The Euro Summit brings together the heads of state or government of the euro area countries, the Euro Summit President and the President of the European Commission. This meetings provide strategic guidelines on euro area economic policy. The comments made at this meeting may give a signal about future decisions, which at the moment are very important not only for the economy but also for the market. US Initial Jobless Claims Every weekly report on the number of individuals who filed for unemployment insurance for the first time during the past week will appear at 14:30 CET. Another increase is expected. The projected number of applications is at the level of 230K. This means that the indicator will be in an uptrend for the second week in a row. Philadelphia Fed Manufacturing Index The Philadelphia Federal Reserve Manufacturing Index rates the relative level of general business conditions in Philadelphia. The last picture of conditions is negative. It has been at a very low level since May, falling below zero levels. The latest reading was at -9.9, expected to rise to -5.0. This is a small but important improvement in conditions. The general appearance is negative. US Existing Home Sales Another important report for the US market is the change in the annualized number of existing residential buildings that were sold during the previous month. The outlook for this indicator is pessimistic. The number is expected to drop from 4.80M to 4.70M. Despite the economic situation, the index remained above 5.0M for a significant part of this year. The first drop below this level took place in July (4.81M). In August, it fell slightly to the level of 4.80M. Another decline may signal a deepening of the downward trend. This means that home sales deteriorate significantly. Source: investing.com Summery 1:50 CET Japan Exports (YoY) (Sep) 1:50 CET Japan Trade Balance (Sep) 2:30 CET Australia Employment Change (Sep) 2:30 CET Australia Unemployment Rate (Sep) 3:15 CET PBoC Loan Prime Rate 12:00 CET EU Leaders Summit 14:30 CET US Initial Jobless Claims 14:30 CET Philadelphia Fed Manufacturing Index (Oct) 16:00 CET US Existing Home Sales (Sep) Source: https://www.investing.com/economic-calendar/
Kuroda Stayed On The Sidelines And The Yen Responded With Losses

Forex: The Day Has Come! USD/JPY Climbed Above 150.00!

Kenny Fisher Kenny Fisher 20.10.2022 12:06
USD/JPY continues to gain ground USD/JPY is almost unchanged today but hit a milestone in the Asian session as it briefly darted above the 150 line, which has psychological significance. This marked the yen’s lowest level since August 1990 as the currency continues to slide. The yen hasn’t recorded a winning session since October 4th and has plunged about 600 points during this period. Later today, Japan releases Core CPI for September, which is expected to rise to 3.0%, up from 2.8% in August. Read next: Tesla Does Not Say Much Directly About The Demand Situation, Ally Financial Sees A Slowdown In Car Loans| FXMAG.COM The Bank of Japan holds its policy meeting next week, but it seems unlikely that it will change its ultra-loose policy. The yen is sinking and inflation is above the Bank’s 2% target, but the central bank is fixated on continuing to provide massive stimulus in order to support the weak economy. Earlier today, Japan’s 10-year government bonds breached the 0.25% cap which the BoJ has fiercely defended, rising as high as 0.264%. The BoJ has responded with an emergency bond-buying package in order to bring yields back below 0.25%. With the BoJ defending its policy and ignoring the yen’s descent, the ball is in the court of the Ministry of Finance (MoF). The MoF dramatically intervened in late September to prop up the yen after it fell below 145, but the move did little more than slow the yen’s descent for a few days. Another intervention is possible, but it would have to be on a larger scale to have any substantial effect on the exchange rate. Finance Minister Suzuki has warned that the government would “properly respond” in the currency markets, but increasingly, the verbal bullets out of Tokyo are being viewed as blanks. With the Federal Reserve showing no signs of easing up on oversize rate hikes, the yen remains at the mercy of the US/Japan rate differential, which continues to widen. The yen’s prolonged downturn looks set to continue, with the currency likely to hit new lows. USD/JPY Technical USD/JPY is testing support at 149.81. Below, there is support at 149.09 There is resistance at 150.04 and 151.32   This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. USD/JPY breaches 150 - MarketPulseMarketPulse
Wage agreement may be game-changing in a way. First meeting of the new BoJ Governor Ueda takes place on April 28th

Chinese Yuan And Japanese Yen (JPY) In Trouble, Gold Price Broke A Record

Marc Chandler Marc Chandler 20.10.2022 15:50
October 20, 2022  $USD, Australia, Canada, Currency Movement, Current Account, Japan, Turkey, UK, US Overview: China and Japan continue to struggle to stabilize their currencies, while global interest rates rise. The offshore yuan has fallen to new lows but in late dealings the onshore and offshore yuan have recovered. The dollar also traded above JPY150 for the first time since 1990 and the market knows it is on thin ice as with the threat of official intervention. A risk-off mood permeates. Equity markets have retreated in the Asia Pacific region and Europe. US futures are also trading lower. Benchmark 10-yields are 1-3 bp higher in Europe, and 10-year US Treasury yields reached a new high around 4.17% before steadying. The greenback is mixed. Among the G10 currencies, the Australian and Canadian dollars are firmer, while sterling, the Swiss franc, and Swedish krona are nursing small losses. Emerging market currencies are also mixed. Central Europe is outperforming East Asia. Gold recorded a new low for the month near $1622.50 before catching a bid. Initial resistance is seen near $1640. December WTI extended yesterday’s recovery and reached a new four-day high near $86.30. The nearby cap is seen in front of $88.00. Natural gas is snapping a four-day drop in both the US and Europe’s benchmark. Iron ore tumbled 2.4% to new lows below $90. However, copper is jumping back 1.4% in what could be its first gain in five sessions. December wheat, which has lost 2.3% over the past two sessions is recouping a little more than 1% today.  Asia Pacific The dollar rose above JPY150 for the first time since 1990 and there has been no sign of intervention. Ironically, the weaker yen is one of the factors pushing up Japanese yields, which in turn spurs BOJ purchases, which in turn underscore the monetary divergence that weighs on the yen. In regularly scheduled and unannounced purchases, the BOJ bought about JPY1.3 trillion today (~$8.5 bln). The yen's weakness aggravates the terms-of-trade shock in the first instance. Japan reported a slight narrowing of the September trade deficit to JPY2.09 trillion from JPY2.8 trillion. Export growth accelerated to 29% year-over-year from 22%, while import growth slowed to 45.9% from 49.9%. Tomorrow, Japan reports September CPI. The core rate, which excludes fresh food, is seen rising to 3%, while the measure that excludes both fresh food and energy may tick up to 1.8% from 1.6%. The BOJ meets next week. Its forecasts may change, but policy is a different story. Employment in Australia ground to a near halt in September, gaining less than 1000 jobs. This may overstate the case, a little. The loss of part-time positions more than offset the 13.3k increase in full-time posts. Still, the loss of momentum is clear. The three-month moving average of full-time posts is slightly negative the lowest this year. The other metric held in better. The participation rate was unchanged at 66.6%, and the unemployment was steady at 3.5%. The Reserve Bank of Australia meets on November 1 and is expected to hike the target rate 25 bp to 2.85%. The dollar poked above JPY150 in early European turnover and quickly fell back to about JPY149.70. It just as abruptly snapped back to the JPY149.90 area. The market knows it is tempting official action and is skittish. Indeed, the entire session range was set in a little more than 30 minutes. Without international cooperation, we see BOJ intervention most likely confined to Tokyo hours and that the second operation will not yield the same results as the first. Late September's record intervention immediately knocked the dollar back about 5.5 yen. Follow-through selling initially saw the Australian dollar fall to a three-day low near $0.6230 before bouncing back to new session highs in the European morning near $0.6280. The intraday momentum indicators are getting stretched, suggesting a run to yesterday's highs around $0.6325 may be too much. The dollar traded to CNY7.2480 today, its highest level since late September. It pulled back a little away from the CNY7.25 level and is trading near CNY7.2360 in late turnover. The prime lending rates were left unchanged today. Even without the latest weakness of the yuan, a cut was not expected. The PBOC lifted the dollar's reference rate to CNY7.1188. That puts the upper end of the 2% band a little above CNY7.26. The greenback reached CNH7.2790 against the offshore yuan, a new high. It has pulled back to below the CNH7.2550 area. Europe Out of the frying pan, into the fire. So goes the UK Prime Minister whose honeymoon may be measured in hours. Her tenure is still be debated. It is not about economic policy so much anymore, as Truss has accepted the reversal of her fiscal experiment. She did not win the leadership challenge among the Tory parliamentary members, but their job was to narrow the field to two candidate and let the rank-and-file decide. And chose they did. Now, a new effort by the MPs to force her out short of an election, which polls say the Conservatives are sure to lose. Meanwhile, Home Secretary Braverman was forced to resign after violating cabinet confidentiality. Braverman was a candidate herself party leader but was knocked out early. Her resignation letter was also a biting criticism of Truss. Ironically less than 24 hours earlier, in a rhetorical flourish, Braverman called the Labour Party and the Lib Dems, a "coalition of chaos, it's the Guardian-reading, tofu-eating wokerati."  Truss tried tightening the screws on a vote on fracking, Tory MPS were threatened with expulsion from the party if they voted against the beleaguered government and controversial issue even in some strong Tory districts. The Chief whip, the parliamentary enforcer resigned as did her deputy. And then in a dramatic reversal, it appears Truss persuaded them to retract their resignations to end a dramatic day. The eurozone reported a 26.3 bln euro August current account deficit. Like, Japan, the eurozone has experienced a significant terms-of-trade shock and a marked deterioration of its external balance. Consider that last August, the EMU recorded a 17.1 bln surplus, or that this year it has recorded an average monthly deficit of 9.2 bln euros compared with an average surplus of 28.3 bln euros in the first eight months of last year. The euro initially extended yesterday's losses to about $0.9755 before recovering to almost $0.9800, where options for nearly 2 bln euros expire today. We suspect that they have largely been neutralized, but today's high is about $0.9795. The intraday momentum indicators suggest there may be a little more upside potential, but the $0.9820 area looks like the best that can be hoped for today, barring new developments. Sterling has sulked to almost $1.1170 in the European morning. On the downside, there are options for GBP480 mln at $1.1145 that roll off today. If Truss does step down, we suspect sterling can bounce initially. While we suspect a major low is in place, a move above $1.15 would add credence to this view. More immediately, the $1.1250 area looks to offer the initial cap. Lastly, Turkey's experiment is set to continue. Despite CPI above 84%, the central bank is expected to cut its one-week repo rate by 100 bp (to 11%) for the third consecutive move. The lira is off about 28.5% this year, of which about 5% has been recorded in the past three months. America The Beige Book was unexpectedly dour. However, it did not deter the surge in US interest rates. The anecdotal report prepared for the November 1-2 FOMC meeting gave an overall sense of slowing activity and easing of some price pressures. Businesses were worried about demand. Several districts reported easing of labor market conditions. In broad strokes, here is a scenario, which seems to be gaining credence:  Q3 growth is a bit of catch-up the first half and most of the payback will be from trade. The US economy may nearly stagnate or worse over the next few quarters. Monetary and fiscal brakes are being slammed. Inflation is high but the year-over-year comparison has too long of a memory, as it were. US headline CPI rose at an annualized rate of around 10% in Q1 and Q2. It slowed to 2.0% in Q3. The Fed, as Bullard suggests, may front load more hikes this year and ratify market expectations (that he helped shape), meaning 75 bp moves in November and December. Frontloading takes on new meaning if one is in a hurry to get inflation down, so it is in a better position to act if when the economy warrants. The implied yield of the December 2023 Fed funds futures is about 17 bp below the implied yield of the September 2023 contract.  September housing starts reported yesterday were weaker than expected, slowing after jumping almost 14% in August. Existing home sales are on tap for today and they are expected to have continued to fall. January was the last month-over-month increase. Mortgage demand has cratered as one would expect. Also, the drying up of the refinance market also cuts into a source of income (consumption?) as previously, owners were often tempted to take out equity. Also, weekly initial jobless claims are rising again but the levels are modest. Still, looking ahead, it seems reasonable to assume the labor market conditions are likely to weaken. The October Philadelphia Fed survey may confirm the weak sentiment seen in the Empire State survey last week. The price sub-indices draw attention given the market's sensitivity to inflation. Four Fed officials have scheduled appearances, but only Hacker (around midday ET) may address the economic issues. Canada's CPI was stronger than expected and this sparked a new appreciation for the risks that the Bank of Canada delivers another three-quarter point hike next week. The headline rose slightly, and the market had expected a small decline. The year-over-year rate eased to 6.9% from 7.0%., not quite as much as expected. That said, the pace of inflation stopped cold in Q3. Consider, and CPI rose at an annualized pace of more than 13% in Q1 and almost 12% in Q2. Q3? Minus 0.4%. The average of the core rates was little changed because of the upward revision to the August series. In the swaps market the odds of a 75 bp move surged from almost 25% to 85%. That failed to give the Canadian dollar traction as the risk-off (proxy S&P 500) was the flavor of the day. For the third session, the US dollar has found offers above CAD1.38 that caps the greenback. A close below CAD1.3720, where the 20-day moving average is found, would be a cautionary note for the greenback. This moving average has not been violated on a closing basis for over a month. Without new US dollar strength, the 5-day moving average can fall below the 20-day moving average early next week. It would be the first time in two months. The greenback firmed to a marginal new high for the month yesterday against the Mexican peso near MXN20.1760. With a few exceptions, the MXN20.20 area has capped the dollar since mid-August. For those needing to buy peso, this area may be attractive. Initial support today is seen near MXN20.05-MXN20.10.    Disclaimer
The USD/JPY Pair Tends To Keep The Trend In A Sideways Direction

The Japanese Yen To US Dollar Pair (JPY/USD) Stays Under Bullish Control

TeleTrade Comments TeleTrade Comments 21.10.2022 08:34
USD/JPY picks up bids to renew intraday high near the multi-year top marked on Thursday. Yields remain firmer amid fears of high inflation, and recession. Japan’s Core CPI jumped to the highest in eight years, stronger for the sixth consecutive month. BOJ again plans for emergency bond buying but policymakers resist meddling in the market and defend buyers. USD/JPY stays mildly bid as it pokes the 32-year around 150.25-30 during Friday’s Asian session. In doing so, the yen pair rises for the consecutive 13 days while poking the highest levels since 1990 amid strong yields and the Bank of Japan’s (BOJ) defense of the easy money policy. It’s worth noting that Japan’s inflation data refreshed a multi-year high earlier in the day, which in turn exerted more pressure on the policymakers to intervene in the markets and safeguard the yen. That said, “Japan's core consumer inflation rate accelerated to a fresh eight-year high of 3.0% in September, exceeding the central bank's 2% target for the sixth straight month as the yen's slump to 32-year lows continues to push up import costs,” said Reuters. Following the data, Japanese Finance Minister Shunichi Suzuki said on Friday that authorities were dealing with currency speculators "strictly", as an extended sell-off of the yen kept markets on heightened alert for further dollar-selling intervention by Tokyo. Also, the BOJ announced emergency bond-buying operations for a second consecutive day and increase the amount of bonds it is buying for its scheduled operations, per Reuters. Elsewhere, US Initial Jobless Claims eased to 214K for the week ended on October 07 versus 230K expected and a revised down 226K prior. Further, Philadelphia Fed Manufacturing Survey Index dropped to -8.7 for October versus the -5 market consensus and -9.9 previous reading. Additionally, US Existing Home Sales rose past 4.7M expected to 4.71M but eased below 4.78M prior. Recently, Federal Reserve Governor Lisa Cook mentioned that ongoing rate increases will be required. Amid these plays, the US 10-year Treasury bond yields refreshed a 14-year high the previous day, around 4.22% by the press time. Also, the two-year US Treasury yields rose to the highest levels since 2007 before recently taking rounds to 4.62%. Further, Wall Street closed in the red following an initially upbeat performance while the S&P 500 Futures extend the previous day’s losses with 0.50% intraday downside at the latest. It should be noted that the escalating hawkish Fed calls, versus the BOJ’s dovish done, also underpins the USD/JPY pair’s upside momentum. That said, the CME’s FedWatch Tool suggests a near 98% chance of the Fed’s 75 bps rate hike. Moving on, any market meddling from the Japanese policymakers will be closely eyed and can trigger the USD/JPY sell-off. Until then, the bulls could keep the reins. Also important to watch will be the last dose of the Fed speakers’ comments before the blackout period preceding November’s Federal Open Market Committee (FOMC) meeting. Technical analysis Unless declining back below the six-month-old support line, around 149.70 by the press time, USD/JPY remains bullish.
Liz Truss The Shortest Prime Minister In The History Of The Great Britain | Crude Oil Is Growing

Liz Truss The Shortest Prime Minister In The History Of The Great Britain | Crude Oil Is Growing

Saxo Bank Saxo Bank 21.10.2022 09:46
Summary:  Equity markets feebly attempted another rally yesterday, but the headwinds of seemingly ever-rising yields proved too strong, sending the indices sharply back lower to the lowest close in three days. This is still a relatively firm performance, given the scale of the rise in yields. Elsewhere, the USDJPY 150.00 level only proved a barrier for about a day, as the weight of rising yields saw the price action spilling higher above this level, with no signs yet of fresh official intervention against JPY weakness.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) Yesterday saw a session relatively like the prior one, as an early rally simply failed to find sustenance in the face of the ongoing grind higher in US treasury yields. Still, market sentiment seems remarkably quiet despite the strong headwinds of the 25-basis point jump in longer Treasury yields this week. Next week is an important one for equities as the earnings season hits its peak with most of the megacap companies in the US reporting earnings, with the price action currently buried in the middle of the two-week range ahead of today’s session. Hong Kong’s Hang Seng (HSIV2) and China’s CSI300 (03188:xhkg) Hang Seng Index and CSI300 fluctuated in a narrow range and were down modestly. In Hong Kong, Chinese developers and China Internet stocks bounced. In mainland bourses, solar, wind power, education, nuclear power, and properties outperformed. General market sentiment is weak as U.S. bond yield risen to new highs and investors pondering the policy implications from the Chinese Communist Party’s National Congress. USD finds stride again on higher Treasury yields, USDJPY spilling above 150.00 The US dollar behaved rather oddly in recent sessions in trading sideways even as US treasuries continue to provide strong support for the currency. Hesitation yesterday from USD bulls may have been on concern that official intervention and choppy price action across USD pairs might await if USDJPY attempted to trade above the psychological 150.00 level. But that level fell late yesterday without any real fuss, trading nearly to 150.50. Still, while USDJPY moves are heavily correlated with the fresh rise in US Treasury yields, it’s interesting that another 50 basis point jump in long US treasury yields to new 14-year highs has not seen new cycle lows in EURUSD and many other USD pairs. Crude oil (CLZ2 & LCOZ2) Crude oil is among just a handful of commodities trading higher in a week that has seen another sharp jump in US bond yields drive down growth expectations. Crude and its related fuel products however continue to be supported by the risk of tightness driven by a period of supply uncertainty in the coming months as OPEC+ cuts supply, and the EU implements sanctions on Russian oil. In addition, uncertainty over Chinese demand as the zero Covid tolerance is being maintained and further incremental SPR sales of 15 million barrels will continue to weigh on prices in the short term. All developments, however, that are likely to keep crude oil rangebound for now, with Brent finding support below $90. Focus next week being earnings from six Big Oil companies, led by Exxon, Chevron and Shell. Gold (XAUUSD) Gold trades down 1.5% on the week close to key support at $1617, the September low and 50% retracement of the 2018 to 2022 rally. A second week of weakness being driven by an across the curve surge in US treasury yields with the ten-year yield rising 23 basis points on the week to 4.25%. Hawkish Fed comments and no signs of economic data showing the much-needed slowdown, has seen the market price in a Fed funds rate above 5% by early next year. The exodus from bullion backed ETFs has gathered pace this week as investors instead focus on increasingly attractive bond market yields, not least the two-year yield at 4.6% yield. Gold will likely continue to struggle until we reach peak hawkishness and/or the dollar starts to weaken. US treasuries (TLT, IEF) US treasury yields lifted all along the curve again yesterday, posting new highs for the cycle, with rises at the long end outpacing those at the short end, with the 2-10 inversion up to –37 basis points versus the cycle low below –50 bps in Sep and earlier this month. Traders are perhaps awaiting incoming data before trading shorter yields, now that the market has priced the Fed funds rate to reach above 5.00% by early next year (priced to do so at the March 2023 FOMC meeting). What is going on? UK Prime Minister Liz Truss resigned in a short statement yesterday … becoming the shortest serving Prime Minister in Britain’s history. She will stay in power until a new leader of the Conservative party can be chosen. The leading candidate is former Chancellor Rishi Sunak and other top contenders include Boris Johnson as the Conservative party has fallen to a record low in the polls against Labour. Japan inflation hits 3%, update to CPI forecasts expected next week Japan’s core inflation touched 3% levels for the first time in over 30 years, matching expectations. Headline inflation came in higher-than-expected at 3.0% y/y while core-core ex fresh food and energy) measure was up at 1.8% y/y from 1.6% y/y previously. The stark yen weakness can prompt further import price pressures in Q4 as well, and demand is likely to pus