Risk on, USD resuming strength

Frank Walbaum

lmportant news this week:

Tue, 16th tentative JP BoJ Policy Rate.
Tue, 16h, 06:30 CET AU RBA Rate Decision.
Wed, 17th, 20:00 CET AU FOMC Interest Rate Decision.
Thu, 18th, 08:00 CET UK Claimant Count Change.
Thu, 18th 09:30 CET CH SNB Rate Decision.
Thu, 18th, 13:00 CET UK BoE Interest Rate Decision.

Dow Jones leads while markets rotate beneath the surface

The US dollar is showing renewed strength, although the move remains relatively measured for now. Equity markets continue to paint a mixed picture, with the Dow Jones reaching a fresh all-time high yesterday while the S&P 500, Nasdaq, and DAX continue to lag behind. This divergence suggests that investors are rotating into different sectors rather than abandoning equities altogether. The AI investment theme remains intact, but market leadership appears to be broadening as traders look beyond the largest technology names for opportunities.
Oil prices remain under pressure and are hovering around the 80 USD area. While downside momentum is slowing, ongoing peace negotiations and improving geopolitical conditions continue to limit upside potential. In Japan, the Bank of Japan raised interest rates to 1% for the first time since 1995, marking a significant shift in monetary policy. Despite the historic move, the Yen remains relatively flat, with USDJPY still trading near the key 160 level. Crypto markets continue to grind higher, supported by stable risk sentiment and ongoing institutional interest.

Market talk

Market sentiment remains moderately positive, although leadership is becoming increasingly selective. The Dow's new all-time high suggests that capital continues to flow into equities, even as technology indices pause after their strong advances. The stronger US dollar is not yet creating significant pressure on risk assets, while lower oil prices help ease inflation concerns. In FX markets, traders remain focused on the implications of higher Japanese rates and whether USDJPY can remain near 160 without attracting intervention concerns. Overall, the market environment remains constructive, but rotation and sector selection are becoming increasingly important themes.

Tendencies in the markets

Equities positive, USD stronger, BTC positive, oil weaker, Silver positive, Gold positive.

Author

Frank Walbaum

AUD/USD drops to two-week low, further below 0.7000 after RBA's less hawkish rate hike

AUD/USD drifts lower for the second straight day on Tuesday, hitting a fresh two-week low during the Asian session after the Reserve Bank of Australia's (RBA) widely expected 25 bps rate hike. The decision was far from unanimous, with three members preferring to hold rates at 4.60%. This tempers expectations of further tightening, which, along with modest US Dollar strength, weighs on the currency pair.

USD/JPY fails near 159.00 amid weak USD, intervention risks

USD/JPY edges lower during Tuesday’s Asian session, reversing part of the previous day's gains to 158.00 as the US Dollar remains depressed amid hopes for Iran diplomacy and ahead of US midterm elections. Meanwhile, intervention risks support the Japanese Yen, though the uncertainty over the timing of the next BoJ rate hike caps gains. This keeps the pair confined within a familiar range and warrants caution before placing directional bets.