News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Oil - US Crude
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Wall Street
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Mixed
GBP/USD
Mixed
USD/JPY
Mixed
More View more
Real Time News
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 100.00%, while traders in Wall Street are at opposite extremes with 66.20%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/FcTW4GHbzZ
  • US 10yr Treasury yields have slipped back below 1.10 today, but remain notably higher compared to earlier in the pandemic $USD $IEF https://t.co/PYLCZGwPHt
  • Indices Update: As of 19:00, these are your best and worst performers based on the London trading schedule: FTSE 100: 0.31% France 40: 0.30% Germany 30: 0.23% US 500: -0.25% Wall Street: -0.40% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/079WIJ3r9O
  • $EURJPY had been heading higher today, crossing above 126.20 and hitting its highest levels since last week. $EUR $JPY https://t.co/bKsWiKxRmz
  • USD/CAD trending lower has been a theme since it peaked in dramatic fashion back in March, but the downtrend may be put to the test soon as a falling wedge pattern comes to light. Get your $USDCAD market update from @PaulRobinsonFX here:https://t.co/qjobL4Uyq9 https://t.co/wgd9nZSGpj
  • US Indices remain in the red but have pared some losses as session advances into the afternoon. DOW -0.38% NDX -0.13% SPX -0.24% RUT -0.03% $DOW $QQQ $SPY $IWM
  • A bout of risk aversion sees the Australian Dollar under pressure this morning with a larger than expected drop in retail sales adding to the soft tone for the currency. Get your $AUD market update from @JMcQueenFX here:https://t.co/fCa9gCxxxk https://t.co/WaAG58Ztar
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 100.00%, while traders in EUR/JPY are at opposite extremes with 64.66%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/juDA0EsIR7
  • Totally normal market behavior happening in $GME which was just halted after surging 69% in the session https://t.co/UT6RrOhZ2L
  • $EURCAD hit an intraday high just shy of 1.5500 before turning slightly downward. The pair is currently trading at its highest levels since early last week. $EUR $CAD https://t.co/Cj6Vu9Rg5L
Yen Would Benefit from Softer US Yields, but FOMC Turned Risk “On”

Yen Would Benefit from Softer US Yields, but FOMC Turned Risk “On”

Christopher Vecchio, CFA, Senior Strategist
Yen_Would_Benefit_from_Softer_US_Yields_but_FOMC_Turned_Risk_On_body_Picture_1.png, Yen Would Benefit from Softer US Yields, but FOMC Turned Risk “On”

Yen Would Benefit from Softer US Yields, but FOMC Turned Risk “On”

Fundamental Forecast for Japanese Yen: Bearish

The Japanese Yen was a bottom performer over the past week, losing ground quickly from Wednesday forward after the Federal Reserve surprised investors by keeping QE3 in place at its current $85B/month pace. Market participants were widely positioned for the Fed to taper QE3 by $5B to $15B, which we speculated could provoke a retrenchment in US yields, to the Yen’s benefit. While this proved true for the US session on Wednesday after the Fed meeting, the non-taper proved to be a major catalyst for “risky” assets. This theme should remain prime as the Japanese economic

With the Fed maintaining QE3 at $85B/month, emerging market and commodity currencies (high yielding/high beta FX) surged between Wednesday and Thursday, to the Yen’s detriment. Perhaps for good reason, too: Japanese yields plummeted to their lowest level since early-May, transforming the Yen not as a vehicle to benefit as a safe haven but as a funding currency amid a swell in central bank-fueled exuberance. It is likely that the Yen suffers against higher yielding FX over the near-term.

The decision to not taper QE3 in September leaves the Yen in a precarious position going forward. Foreign concerns remain hazy but look to be steadying. Geopolitically, international consensus is growing to avoid military conflict in Syria now that the Assad regime has begun cooperating with weapons regulators. In Iran, a stage for more open dialogue with the West has potentially emerged in new President Hassan Rouhani. Regardless if these talks for broader cooperation amount to anything, there’s reason to believe the “war premium” built into commodity markets (particularly oil) and the USDJPY (via Treasuries) could thaw.

Out of the United States, two potential catalysts exist to knock the Yen around: the Fed, of course; and Congress. The Fed made it quite clear that rhetoric aside, incoming economic data would need to improve for the Fed to taper QE3. This is the same line that was towed at the June FOMC meeting which kick started the ‘Septaper’ speculation. The case for why the Fed chose not to taper was easily made with a glance towards inflation and labor data, which hadn’t shown progress since June. It also means that there is increased influence of US data on currencies and interest rates; the USDJPY in particular should show increased sensitivity to labor and inflation data.

The US Congressional influence on the Yen should become increasingly profound over the next few weeks as it appears that another debt limit showdown is likely. As long as Congress remains a veritable drag on the US economy – Fed Chairman Bernanke aptly pointed this out on Wednesday as a reason that the Fed didn’t taper – there is scope for the Yen to at least remain buoyant against the US Dollar. The upcoming votes on the continuing resolution bills in the House and the Senate will shape the debt debate; if they don’t go smooth, greater turbulence in October is likely. In such a case, the Yen’s misfortune against higher yielding FX would quickly turn, just like in August 2011.

At home in Japan, influences are neutral on the Yen as the economy is generally better than previously expected. The sales tax hike appears to be a go, with Prime Minister Shinzo Abe set to decide the matter on October 1, and the Bank of Japan has thus far indicated that it would be willing to extend further monetary easing to prevent a dip in economic activity (higher taxes lead to lower consumption).

The government has pressed firms to raise wages to help offset the matter as well (which would balance out lost consumption), but so far little progress has been made on this front. Even if Japan is successful in stoking inflation, without wage growth, consumption will fall (consumers will have reduced purchasing power), and the economy will suffer once more – putting Abenomics itself at risk for total failure – and potentially ushering in greater concerns about Japan’s seemingly insurmountable debt burden. –CV

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES