After declining by more than 10% over the past two weeks, the Japanese Yen finally sees a substantial drop after Japan’s central bank pledges no rate hike will be made while markets are unstable.
- The past day has seen markets reverse their previous strong momentum in favour of the Japanese Yen and against risky assets, as risky assets recover strongly, and the Japanese Yen is finally being sold off. The Yen reversal seemed to be triggered by comments from the deputy governor of the Bank of Japan to the effect that the Bank will not hike rates while markets are unstable. Also, the Yen rose so much over the past two weeks that it was overbought and due a correction anyway, as I forecasted in my weekly Forex forecast.
- Risky assets are broadly trading higher today, and US Treasury Yields are rising firmly from the long-term lows they made earlier this week. The standout performer is the Japanese stock market, which saw the Nikkei 225 Index increase in value today by more than 1.75%. Most other major stock indices globally are advancing, but it is worth noting that the NASDAQ 100 Index entered correction territory recently.
- In the Forex market, the Japanese Yen is the weakest major currency, while the New Zealand Dollar is the strongest: the NZD/JPY currency cross is up by more than 3% during the Tokyo session alone. Trend traders will probably still be long of the EUR/USD currency pair after it made a bullish breakout earlier this week. The US Dollar has been weak but has begun to make a significant recovery after finding support. Day traders will be interested in trading the high volatility in the Yen. There are Yen crosses that have moved by more than 10% in value in barely more than two weeks, which is extraordinary.
- Almost all risky assets are showing some bullish momentum right now, so currently, the direction for day traders to be trading today looks obvious, with stocks, Bitcoin, some commodities, and the commodity currencies all strong against the Japanese Yen, or even the US Dollar.
- New Zealand unemployment data released earlier showed a surprisingly strong economy, which has helped boost the Kiwi today as it increases the case for not cutting rates. The Unemployment Rate was expected to rise to 4.7% but reached only 4.6%.
- There will be a release later of New Zealand Inflation Expectations data.
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