Japanese Yen: Oil shock weighs JPY against US Dollar – Scotiabank

FXStreet Insights Team FXStreet

Scotiabank strategists Shaun Osborne and Eric Theoret highlight renewed weakness in the Japanese Yen (JPY), which is underperforming G10 peers and threatening fresh multi-decade lows as USD/JPY trades at levels last seen in 1986. They stress that surging Oil prices are a clear downside risk via Japan’s terms of trade, while the chart offers little guidance on resistance after the recent powerful rally.

Multi-decade highs and downside risks

"The yen is soft, down 0.2% vs. the USD and underperforming most of the G10 currencies into Wednesday’s NA session."

"The renewed weakness is worrisome following last week’s failed recovery and the yen looks to be threatening a break to fresh multi-decade lows."

"The latest resurgence in geopolitical tensions presents a clear downside risk for the yen, as surging oil prices deliver a crushing blow to Japan’s terms of trade."

"The USD/JPY chart offers little clarity in terms of framing major resistance levels, given that the recent rally has delivered a push to fresh multi-decade highs reached levels last seen in 1986."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

AUD/USD remains below 0.7000 as focus shifts to FOMC Minutes

AUD/USD struggles to capitalize on its three-day-old recovery move from 0.6900, or a three-month low, and trades with a negative bias during Wednesday's Asian session. Amid geopolitical uncertainty, the US Dollar attracts some dip-buyers after a fresh leg up in US bond yields, keeping the currency pair below 0.7000. However, RBA rate-hike bets support the Aussie as USD bulls await FOMC Minutes.

USD/JPY eyes 200-SMA breakout above 158.50 ahead of FOMC Minutes

USD/JPY climbs to a one-and-a-half-week high during the Asian session on Wednesday, with bulls now awaiting a move beyond the 200-day SMA hurdle near mid-158.00s before positioning for further gains ahead of FOMC Minutes. Meanwhile, a fresh leg up in US bond yields revives US Dollar demand amid geopolitical uncertainties. Moreover, concerns about Japan's fiscal policy weigh on the Japanese Yen, supporting the pair.

Gold stays firm; looks at $4,200

Gold builds on Monday’s marginal bounce, although it struggles to reclaim the key $4,200 mark per troy ounce so far on Tuesday. The yellow metal’s advance comes on the back of the fresh downside momentum in the US Dollar in tandem with retreating US Treasury yields across the curve.

ZEC expands institutional momentum as Winklevoss files for Zcash ETF

Winklevoss Asset Services, co-owned by crypto exchange Gemini founders Cameron and Tyler Winklevoss, filed a Form S-1 registration statement with the US Securities and Exchange Commission (SEC) on Tuesday for the Winklevoss Zcash (ZEC) ETF. The filing proposes a fund that would hold ZEC and seek to track its price.

RBI looks set to step up Repo Rate by 25 bps to 5.5%

The Reserve Bank of India is set to announce its bi-monthly monetary policy decision on Wednesday at 10:00 AM IST, in a meeting where the central bank is expected to initiate an interest rate hike cycle after maintaining a status-quo so far this calendar year. According to the market consensus, the RBI will hike its key Repo Rate by 25 basis points to 5.5% from 5.25%.

Eurozone inflation just hit 3.8%, its highest in three years. This chart shows why the ECB can’t simply hike its way out

The ECB would normally have a relatively straightforward answer to inflation running almost twice its target: raise interest rates. But these are not normal circumstances. This time, the bond market is already doing part of the tightening for it, leaving the ECB facing an increasingly difficult dilemma.