Summary:
USD/JPY hit its weakest level since April 1990, hovering around 160. Markets watch for possible intervention by Japanese authorities.
USD/JPY hit its weakest levels since April 1990 on Monday and hovered around the critical 160 mark. Markets are on guard for any intervention by Japanese authorities against the rout.
The yen saw its biggest drop in six months in the last trading session as the BOJ offered no indication it was in a hurry to respond. There are also downward pressures from "King Dollar".
The debate for the Fed is beginning to shift from how many times to cut interest rates this year to whether to cut them at all in 2024. All the data so far is showing US inflation has stopped cooling.
Concerns about the negative effects of the weak yen, such as higher import costs and weaker consumer sentiment, are growing in the business community. Therefore, the officials should act sooner than later.
The nation conducted its first yen-buying intervention since 1998 in Sep 2022 when then Governor Haruhiko Kuroda made dovish comments following a policy decision. We are now in a similar situation.
Investors are bracing for a sharp rally out of intervention. Appetite for options that pay out on a sizable move in the Japanese currency in either direction is at the highest level since October 2022.
USD/JPY may hardly drop below 160 in the near future, as historical trends suggest and with the RSI nearing 90. However, a clearance of 152 may strengthen the bullish outlook.
Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
Oil prices steadied on Friday, set for a weekly loss, as the Fed and ECB's cautious stance fueled global economic concerns.
2024-12-20
The October PCE price index rose 2.3% YoY, as expected. Excluding food and energy, core inflation climbed 2.8% compared to last year.
2024-12-20
US stocks plunged, with the Dow Jones hitting a record low. Many strategists see potential for further gains, while Tesla's stock hit a new high.
2024-12-19
