The USD/JPY currency pair was pushed to a fresh multi-month high as risk sentiment continued to improve on prospects of a deal to end the US government shutdown.
- The USD/JPY currency pair
briefly traded at a new 9-month high close to ¥154.50, pushed higher on improving risk sentiment, which has caused funds to flow out of the safe-haven Japanese Yen and into the US Dollar. However, the breakout has not yet followed through, with the price currenctly consoilidating moderately close to the high. In the Forex market, trend traders will already be long of this currency pair, and some traders will be looking for a daily (New York) close to bring a long trade entry here. Since today's Tokyo open, the best performing major currency has been the US Dollar, while the British Pound has been the weakest, although the values are relatively small so not very significant.
Stock markets mostly closed firmly higher yesterday, with major US indices such as
the S&P 500 Indexand
the NASDAQ 100 Indexregaining a lof of recently lost ground. However, since the New York close yesterday, stock markets have been either consolidating or falling a bit. It certainly remains a bull market, and many investors are long in the borader stock market, especially the US tech sector in general and the magnificant seven equities in particular.
The US House of Representatives will vote later this week on a deal to end the Government shutdown, with the Senate seemingly in the bag for the deal. It probably won't come in time to allow for crucial US CPI (inflation) data to be released this Thursday, however.
Federal Reserve Governor advocated for a very strong rate cut at the Fed's next meeting in December, but the market sees no meaningful chance that this will happen. The CME FedWatch tool shows that markets are again shrinking the chance of even a 0.25% rate hike at the meeting to 63%, so the US Dollar remains strong. The fact that opinion is so split on the chance of a December rate hike makes it likely that the market will react quite strongly to whatever course the Fed decides.
President Trump has tried to maintain a narrative of good news by making three major comments in the recent news cycle:
"We will figure something out" if the Supreme Court rules against him on tariffs. This is widely perceived as true, which is why markets are not reacting strongly to the prospect of a ruling against Trump.
Inflation will drop to 1.5% "pretty soon", he is trying to push up stocks and encourage a rate cut in December by the Fed.
Working on a deal with Switzerland to lower tariffs - but this has had no effect on the Swiss Franc.
- Bitcoin
has failed to get established above the key resistance level at $106,403 and is falling with as much momentum as it rose within recent days. As other risky assets are in a more consolidating than bearish mode, this is a bearish sign for Bitcoin.
8. It is a public holiday today in the USA, Canada, and France. Forex markets are likely to see thin liquidity from halfway through the London session until the Tokyo open.