A Week of Market Shifts, Yen Skyrockets on BoJ Speculations
| Action Insight Weekly Report 12-9-23 |
| A Week of Market Shifts, Yen Skyrockets on BoJ Speculations |
The global financial markets last week were primarily influenced by three pivotal themes: Yen's dramatic rise, Dollar's strength following robust US employment data, and repercussions of Moody's downgrading China's rating outlook. The most striking was the Yen's significant surge, driven by intensified speculation about an impending exit from negative interest rates by BoJ. The anticipation of this policy change propelled Yen as the strongest currency, simultaneously impacting Japan's bond yields and stock market, with Nikkei facing a significant downturn. Dollar secured its position as the second strongest currency, buoyed by robust employment and upbeat consumer sentiment data. The solid labor market report led traders to reconsider their expectations for an early rate cut by Fed. Contrasting with strengths of Yen and Dollar, both Australian and New Zealand Dollars emerged as the weakest performers. Their downturn was primarily driven by deteriorating risk sentiment in Asia, especially following Moody's decision to downgrade China's rating outlook. Meanwhile, RBA's decision to hold rates steady failed to provide any significant impetus to Aussie. Elsewhere in the currency markets, Canadian Dollar ended as the third strongest, benefiting from Dollar's rally and also influenced by BoC's decision to keep interest rates unchanged without adopting a dovish tone. European majors displayed mixed performance. Sterling was on the weaker side, while Euro showed relative strength compared to its European counterpart. |
USD/JPY Weekly Outlook USD/JPY's fall from 151.89 accelerated to as low as 141.59 last week, but recovered after drawing support from 142.45 fibonacci level. Initial bias remains neutral this week for consolidations first. But recovery should be limited below 147.14 support turned resistance to bring another fall. On the downside, break of 141.59 and sustained trading below 142.45 fibonacci level will pave the way to next fibonacci level at 136.63. | |
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