usd to jpy

As the USD/JPY currency pair finds itself comfortably within the 145-150 FX intervention zone, market participants are closely monitoring the potential actions of the Bank of Japan (BoJ). This range has historical significance, as it was the level at which the BoJ executed substantial intervention last September and October, selling $70 billion to influence the exchange rate. However, the current landscape suggests that Tokyo authorities are taking a more cautious approach, refraining from immediate intervention despite the ascent of USD/JPY driven by rising US Treasury yields.

An important factor playing into this restraint is the substantial influence of US Treasury yields on the USD/JPY exchange rate. The authorities in Tokyo appear to be allowing the impact of these yield-driven dynamics to play out before deciding on any direct intervention measures. Additionally, the market conditions at present contribute to the hesitancy in FX intervention. The one-month USD/JPY traded volatil

Volatile GBP/AUD - Good Morning Forex By FXMAG.COM

Volatile GBP/AUD - Good Morning Forex By FXMAG.COM

Rebecca Duthie Rebecca Duthie 11.04.2022 11:30
To give some perspective on how the Forex market is currently performing, this article will report on 4 different currency pairs, a major currency pair, a minor currency pair, a volatile currency pair and another major pair. The major currency pair is the EUR/USD: Since the market opened this morning the Euro hit a high of 1.09471, this means it costs traders 1.09471 USD to buy 1 Euro. This figure beats Fridays's market closing. The Euro held its position in spite of the fact that the far right did not win the first round of the elections in French votes, this position was helped by the rising U.S. Yields. EUR/USD Chart Stronger Euro - EUR/GBP: Since market opening, the GBP is at 0.8377. This means it costs traders 0.8377 GBP to buy 1 Euro. The EUR/GBP relationship is bearish. Despite this bearish relationship, the Euro has slightly strengthened over the weekend. EUR To GBP Chart Volatile GBP/AUD: Since market opening, the AUD reached a high of 1.75442, this means that it costs 1,75443 AUD to buy 1 GBP. The relationship between these 2 currencies is considered volatile due to the fact that the AUD is a commodity currency (the price of AUD is linked to the value of Australian exports). Therefore, since the start of the trade war between the US and China, currency pairs that contain AUD have increased in Volatility. GBP To AUD Chart Rushing 10-year treasury yield - USD/JPY: The relationship between these 2 currencies is currently bullish. Since market opening, the JPY reached a high of 125.444, which means that it costs 125.444 JPY to buy 1 USD, the weakening Yen is as a result of the 10 year treasury yield rushing 77bps reaching 2.77%. USD/JPY Chart Charts: finance.yahoo.com
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.
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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.
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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.
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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.
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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
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.
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
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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