The Week Ahead – BoJ intervention may not halt yen’s slide

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Copy of The Week ahead Key data release GMT time 1

USDJPY consolidates post-BoJ intervention

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The Japanese yen clawed back some losses after the BoJ intervened in the FX market for the first time since 1998. The central bank loaded up its currency in an attempt to ease imported inflationary pressure. However, this symbolic move can only offer the battered yen relief and is unlikely to reverse the current trend. Politicians have stuck to loose policy to support the fragile recovery, in a move contrary to the global race to tighten financial conditions. Divergent yields between Japan and the US may still favor the latter currency. August 1998 is high at 147.50 is the next hurdle and 139.00 the closest support.

EURUSD slips as Fed remains hawkish

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The US dollar soared to a two-decade high after the Fed raised interest rates by another 75 basis points. Officials signaled more similar hikes before the end of the year. An update on the US rates projection shows 4.4% by the end of the year, a full percentage point higher than last June’s forecast. In Europe, the economic slowdown, energy tensions and escalation in Ukraine could keep traders away from the single currency. This divergence mirrors the fate of other riskier currencies. In a world full of uncertainties, high yield and safety increase the relative attractiveness of the dollar. The couple slides to 0.9600 after being covered by 1.0040.

UKOIL softens as global growth at risk

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Brent crude is struggling over geopolitical tensions and demand uncertainty. Russia has announced the mobilization of more troops in an escalating move in the Ukraine conflict. Further sanctions could be expected from the west along with Russia’s retaliation in energy supplies. Meanwhile, Washington has signaled little progress in reviving the 2015 Iran nuclear deal. The impasse could keep the tight market in check. However, the global race to stifle inflation is making growth collateral damage. Lower demand and weakened risk appetite may continue to fuel the correction. The price soars above 84.00 and 105.00 is an important cap.

NAS 100 is struggling because rates still don’t see a ceiling

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The Nasdaq 100 slips further as the Fed reaffirms its restrictive roadmap. As the economy has become secondary to monetary policy, investors fear that the window for a “soft landing” may be closing. The question would shift from whether the recession is around the corner to how long it will last. The central bank reiterated that growth and jobs will be affected. A solid labor market can act as a cushion, allowing policymakers to push the tightening agenda. Growth stock investors will need to remain patient as rates are not expected until 2024. The index soars above 11100 with 12000 as the first resistance.

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