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
EUR/USD
Mixed
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
Bearish
Gold
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
GBP/USD
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
USD/JPY
Mixed
More View more
Real Time News
  • The longer-term EUR/USD outlook will hinge on Thursday’s ECB guidance; any hint of a further easing of Eurozone monetary policy would weaken it, but that is far from guaranteed. Get your #currencies update from @MartinSEssex here: https://t.co/RmHCfIwdqp https://t.co/hvETa6mtft
  • Traders tend to overcomplicate things when they’re starting out in the forex market. This fact is unfortunate but undeniably true. Simplify your trading strategy with these four indicators here:https://t.co/A4dqGMPylo https://t.co/M8WTvZgx2K
  • The Australian Dollar was under selling pressure this past week, but it held its ground. Bearish patterns brew in AUD/USD and AUD/JPY. Will EUR/AUD, GBP/AUD try to break higher again? Get your #currencies update from @ddubrovskyFX here: https://t.co/04kzJSqgNG https://t.co/ulPk1UneMM
  • Stocks are set to endure a string of data releases with market-moving potential in the week ahead in the form of tech earnings, European GDP and more, even as the US Presidential election clamors for the spotlight. #equities update from @PeterHanksFX here https://t.co/R6tpEvfXJb https://t.co/7koHTyh2AK
  • As we round our way towards a new week, Cable is within the confines of a bullish structure with beginnings back in September. Get your #currencies update from @PaulRobinsonFX here: https://t.co/NIbRTVmjqq https://t.co/zYma4Iq4dP
  • Myth or fact? One thing is for sure, there are a lot of misconceptions about trading. Knowing the difference between common trading myths and the reality is essential to long-term success. Find out about these 'myths' here: https://t.co/UGhbX6kn3H https://t.co/NE2RB1NT55
  • The Federal Reserve System (the Fed) was founded in 1913 by the United States Congress. The Fed’s actions and policies have a major impact on currency value, affecting many trades involving the US Dollar. Learn more about the Fed here: https://t.co/ADSC4sIHrP https://t.co/MVwUUltt6R
  • GDP (Gross Domestic Product) economic data is deemed highly significant in the forex market. GDP figures are used as an indicator by fundamentalists to gauge the overall health and potential growth of a country. Learn use GDP data to your advantage here: https://t.co/38gTDn8ejP https://t.co/XnQzHlFsAv
  • Have you been catching on your @DailyFX podcast "Global Markets Decoded"? Catch up on them now, before new episodes release! https://t.co/Twr44cZ1GB https://t.co/FuLPdCLpKs
  • Elections anticipation may sabotage trend development next week, but that won't curb volatility between stimulus talks, Covid cases, FAANG earnings and 3Q GDP updates. Top of my watch list this week will be $EURUSD. My video on it all: https://www.dailyfx.com/forex/video/daily_news_report/2020/10/24/EURUSD-a-Top-Volatility-Risk-This-Week-but-Election-Anxiety-May-Keep-Markets-From-Trends.html?ref-author=Kicklighter&QPID=917719&CHID=9 https://t.co/t14eT2SMa7
Japanese Yen May Rebound as Risk Aversion Sweeps Financial Markets

Japanese Yen May Rebound as Risk Aversion Sweeps Financial Markets

2014-09-19 00:37:00
Ilya Spivak, Head Strategist, APAC
Share:
Japanese Yen May Rebound as Risk Aversion Sweeps Financial Markets

Fundamental Forecast for Japanese Yen: Bullish

  • ECB, PBOC Easing May Not Sustain Sentiment Trends Absent the Fed
  • Risk Aversion to Fuel Carry Trade Unwind, Boosting the Japanese Yen
  • Help Identify Critical Turning Points for USD/JPY Using DailyFX SSI

The markets navigated through a treacherous succession of high-profile event risk over the past two weeks, leaving investors with much to digest. Investors will have just such an opportunity in the week ahead as a lull in news-flow allows for a period of reflection. This process may pave the way for a recovery in the Japanese Yen after the currency slumped to a six-year low against the US Dollar.

The fragility of market-wide risk appetite is the key consideration. September began with an underwhelming easing effort from the European Central Bank (ECB). The markets were holding out for the launch “classic” QE – the purchase of government bonds with printed money – and didn’t get it. Confidence in another key component of the ECB’s stimulus package was shaken last week as the first TLTRO operation saw uptake of just €82 billion, far less than the expected €150 billion result.

In the meantime, the Federal Reserve seemed to move closer to the hawkish side of the policy spectrum. An updated set of policymakers’ interest rate projections suggested Janet Yellen and company now expect borrowing costs to be a full 25bps higher in 2015 than they thought in June. The markets have taken notice: traders are now pricing in 60bps in US policy tightening over the coming 12 months, the most in the G10 FX space.

This seems to bode ill for sentiment, which has managed to remain as resilient as it has been largely on the back of generous Fed accommodation over recent years. With the US central bank ever-closer to withdrawing its support and the ECB effort to replace it looking increasingly inadequate as a replacement, the threat of on-coming risk aversion appears to be growing.

China presents one mitigating factor. Risk appetite swelled after the PBOC unveiled a new SLF facility injecting CNY500bn into its banking sector considering the move amounted to the approximate equivalent of a 50bps RRR decrease. Optimism may prove fleeting however considering the liquidity provision has a defined 3-month shelf life however, whereas an outright RRR rate cut would amount to an open-ended loosening of policy. That means investors may not find lasting comfort in Beijing’s efforts.

Given the time to consider such macro-level forces, the markets may well conclude that the sum total of support offered by central banks outside of the US will not be able to replace the Fed at a foundation for sentiment trends. This points to a forthcoming selloff across the range of risky assets, opening the door for an unwinding of Yen-funded carry trades that sends the Japanese unit swiftly higher.

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

DISCLOSURES