Japanese Yen improves to six-week high

Japanese yen posts sharp gains on Monday.

Kenny Fisher MarketPulse

The Japanese yen is up for a third straight day on Monday and has climbed 2% against the US dollar in the current rally. In the European session, USD/JPY is trading at 148.40, down 0.84%.

After falling to a one-year low last week, the yen has rebounded and is trading at a six-week high. The swing in favour of the yen has been driven by expectations that Fed policy will be less restrictive in the first half of 2024. According to the CME’s FedWatch tool, there is a 100% likelihood of a pause in December, with a 30% chance of a rate cut in March 2024, followed by a 64% chance in May.

The yen has received a boost as the US/Japan rate differential has decreased. Just a month ago, 10-year US Treasuries were trading at 4.98%, but have fallen to 4.44% at present. The lower yields have made US Treasuries less attractive to investors and the yen has capitalized on this sentiment. The FOMC minutes will be released on Wednesday and could provide some insights into the Fed’s future rate path.

The recent strength of the yen has tempered talk of intervention by Japan’s Ministry of Finance, which threatened to step in after the USD/JPY fell close to 152 last week. The yen has been showing sharp swings of late, raising the question of whether the yen’s recent upswing is sustainable.

Investors are also looking for hints from the Bank of Japan about tightening policy. The central bank has tried to dampen expectations for a shift in monetary policy, but there have been some subtle signals that the BoJ will exit negative rates in 2024.

USD/JPY technical

USD/JPY has pushed below support at 149.29 and is testing support at 148.54.
There is resistance at 150.22 and 151.25.

Author

Kenny Fisher

MarketPulse

A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities.

EUR/USD hits two-day highs near 1.1820

EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold climbs further, focus is back to 45,000

Gold regains upside traction and surpasses the $4,900 mark per troy ounce at the end of the week, shifting its attention to the critical $5,000 region. The move reflects a shift in risk sentiment, driving flows back towards traditional safe haven assets and supporting the yellow metal.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid risk-off, $2.6 billion liquidation wave

Bitcoin edges up above $65,000 at the time of writing on Friday, as dust from the recent macro-triggered sell-off settles. The leading altcoin, Ethereum, hovers above $1,900, but resistance at $2,000 caps the upside. Meanwhile, Ripple has recorded the largest intraday jump among the three assets, up over 10% to $1.35.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.