As carry trades began unravelling, the yen began rallying. Adam is a Forex trader who has worked within financial markets for over 12 years, including 6 years with Merrill Lynch. You may also find live updates around the clock if any major changes occur in the currency pair. Yesterday was an eventful day for financial markets. US dollar to Japanese yen Outlook Outlook.
Occasional pullbacks like this will offer a potential buying opportunity and likely to. Treasury yields and increasing financial problems in Italy. The Japanese Yen was essentially used as a safe-haven asset.
Cautious investors were reacting to a drop in the Euro which fell to a six-week low on Tuesday after. The region around the 1. Providing support for the Forex pair the last several days has been expectations of higher interest rates after the Fed raised its benchmark interest rate on September 26 and strongly suggested another.
The US dollar rallied slightly during the day on Monday, but then sat a bit still. Perhaps it is a bit exhausted, as we have been so bullish as of late.
Also, the strength in the USD played a role to break the market harder. Federal Reserve, expectations of further rate hikes by the central bank and a bullish outlook for the U. What it all comes down to is the widening. The divergence between the monetary policies of the hawkish U. The widely expected Fed rate hike last week also widened the spread between U. Today's US dollar index trading range is Yesterday was an eventful day for financial markets. Ahead of this week's non-farm payrolls figures, traders are focused on US economic data and guidance from the Federal Reserve.
Historically, the Fed has raised rates when US growth is accelerating and employment conditions are improving. Thanks to accelerating private payrolls ADP employment change and ISM non-manufacturing PMIs rising to levels not seen since , economic data suggests significant strength in the underlying economy.
All else held equal, the continued outperformance of the US economy relative to other major economies is positive for the US dollar. In line with previous remarks, Powell noted that US unemployment is at year lows.
Finally, Powell noted that US monetary policy remained accommodative, and that interest rates had room to rise further. All in all, Powell's comments suggest that the Fed is likely to continue raising rates.
While his previous comments had a limited reaction on Tuesday, the combination of strong US data and his upbeat guidance sent US Treasury yields soaring yesterday. Notably, year US Treasuries are currently yielding 3. The last time year US Treasuries offered yields above 3. As US economic data accelerates and the Federal Reserve points to further rate hikes, our outlook on the US dollar remains bullish.
The Japanese yen is currently weakening against all major currencies except the Australian dollar. Yesterday, the yen strengthened against the US dollar.
Notably, trading volumes in yen futures accelerated relative to the previous session and were higher than day averages. This suggests some conviction in yesterday's move. As risk sentiment improves today, the yen is weakening as a result.
As a safe haven currency, the yen is weakening thanks to improving risk sentiment and rising global bond yields. In recent history, the yen has continued to weaken thanks to supportive risk sentiment and rising yields. Our outlook on the yen remains bearish. In our previous commentary on the US dollar, we wrote that the buck was set to rise further thanks to our forecast for slowing US growth and inflation.
Following the publication of our last commentary, the performance of the US dollar index a measure of the currency against major pee…. In our last commentary on the US dollar , we wrote that the buck was set to move higher given underlying economic trends.
Specifically, US growth and inflation was likely to keep accelerating, while the opposite was likely to happen in most major regions outside the United States. Following the publication of our last commentary, the US dollar index has strengthened from around In our previous commentary on the US dollar, we warned that a weak dollar was hiding significant risks in growth-sensitive assets such as equities and European currencies.
Thanks to a slowdown in economic growth outside the United States coupled wit…. In our last commentary on the Japanese yen, we wrote that the currency was looking excessively weak against the euro. In early , doubts regarding the integrity of the Eurozone led many to take refuge in the Japanese yen. Unlike the euro, the Japanese yen exhibits classic safe haven characteristics and tends to strengthen during downturns.
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