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Japanese Yen and Nikkei 225 Tank as US Greenback Re-Asserts Itself. New USD/JPY Highs?

japanese-yen-and-nikkei-225-tank-as-us-greenback-re-asserts-itself.-new-usd/jpy-highs?

Japanese Yen, USD/JPY, US Greenback, Fitch, Nikkei, BoJ, BoE, Crude Oil, WTI – Speaking Factors

  • Japanese Yen help wilted together with JGBs after US Greenback resumed rallying
  • The markets are reappraising positioning with Treasury yields climbing once more
  • Threat property stay beneath strain. If that continues, will USD/JPY break 145?

The Japanese Yen sunk to a 4-week low in opposition to the US Greenback at this time because the market proceed to take inventory of the lean triggered by the US debt downgrade.

Fitch, the credit standing company, downgraded the US to AA+ from AAA on Tuesday for the primary time since 1994.

Then on Wednesday, the US Division of Treasury introduced that they’ll search to situation US$ 103 billion subsequent week, up from the US$ 96 billion final time. Treasury yields are just a few foundation factors larger throughout the curve, however extra so on the backend.

Threat property typically have been on the again foot ever since and APAC equities adopted at this time with Japan main the best way decrease. The Nikkei 225 index is down over 1% together with the TOPIX and JPX-Nikkei 400 indices.

USD/JPY pushed above 143.50 at this time however it has been the growth-linked Aussie and Kiwi {Dollars} which have depreciated probably the most on this newest risk-off rout.

To compound issues at this time, the Financial institution of Japan introduced an unscheduled bond-buying program at this time, following Monday’s unscheduled motion. The 10-year Japanese Authorities Bond (JGB) remains to be buying and selling close to 0.65%, the very best stage since 2014.

Nonetheless, the unfold between 10-year Treasuries and JGBs proceed to maneuver in favour of the US Greenback as illustrated within the chart beneath.

In different central financial institution information, the Financial institution OF England charge determination is forward at this time, and a Bloomberg survey of economists is forecasting a 25 foundation level elevate in its goal charge.

The in a single day index swap (OIS) market is 75 foundation factors of tightening in whole by the tip of the second quarter of subsequent 12 months. In any case, GBP/USD is languishing close to 1.2700.

Crude oil has struggled up to now by way of Wednesday after collapsing yesterday. The WTI futures contract is close to US$ 79.50 bbl whereas the Brent contract is buying and selling at over US$ 83 bbl on the time of going to print.

Spot gold is resting close to three weeks lows simply above US$ 1,930. Dwell costs might be discovered right here.

Wanting forward, Wall Road futures are pointing towards a gentle begin to its money session.

The complete financial calendar might be seen right here.

USD/JPY In opposition to 10-Yr Treasury/JGB Yield Unfold

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Chart created in TradingView

— Written by Daniel McCarthy, Strategist for DailyFX.com

Please contact Daniel by way of @DanMcCarthyFX on Twitter

DailyFX supplies foreign exchange information and technical evaluation on the traits that affect the worldwide foreign money markets.

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