JPY advances on narrowing yield spreads to 2022 Lows – Scotiabank

FXStreet Insights Team FXStreet

The Japanese Yen (JPY) is strengthening again, up 0.3% against the US Dollar (USD) as USD/JPY moves back toward Monday’s lows and threatens a broader retracement of its mid-November weakness, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

Markets hold steady on BoJ path with 25bp hike priced by March

"The yen is up 0.3% vs. the USD and a mid-performer among the G10 currencies as it pushes back toward Monday’s highs (USDJPY lows) and threatens a more meaningful retracement of the weakness observed since mid-November."

"The outlook for relative central bank policy remains supportive and yield spreads are narrowing to fresh multi-year lows at levels last seen in 2022."

"Domestic rate expectations are little changed with markets pricing 20bpts of tightening for December and a full 25bpt hike by March. There are no major domestic releases scheduled through the end of the weak, leaving the focus squarely centered on broader developments."

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.

EUR/USD remains slightly offered above 1.1800

EUR/USD trades with marginal losses just above the 1.1800 barrier Wednesday, always against the backdrop of the resumption of the upside momentum in the US Dollar. Meanwhile investors continue to assess the latest advanced inflation data in the euro area and results from the US ADP and ISM Services PMI.

GBP/USD loses the grip, back near 1.3670

GBP/USD reverses Tuesday’s gains, coming under fresh selling pressure and challenging the mid-1.3600s zone on Wednesday. Furthermore, Cable’s downtick comes in response to decent gains in the Greenback while investors gear up for the BoE’s Super Thursday.

Gold resumes the decline, back below $5,000

Gold faces some fresh downside pressure on Wednesday, receding below the key $5,000 mark per troy ounce midweek. The yellow metal’s decline comes on the back of the firmer US Dollar and mixed US Treasury yields across the curve, while fresh geopolitical effervescence appears to limit occasional weakness.

Crypto Today: Bitcoin, Ethereum, XRP tick up despite macro uncertainty, retail exodus

Bitcoin rises above $76,000 following an extended decline to $72,946 the previous day as Fed-related headlines keep investors on edge. Ethereum advances toward the $2,300 hurdle amid low retail interest, with futures Open Interest falling to $26.3 billion.

Should investors abandon AI as software stocks slide?

AI is not being abandoned by markets. It is being priced more carefully. Over the past few weeks, the underperformance of software and SaaS stocks has sparked a familiar question: is the AI trade breaking down? The answer is no.

Ripple stabilizes amid mixed signals as ETF inflows resume despite low retail activity

Ripple hovers around the $1.60 pivotal level at the time of writing on Wednesday, reflecting stable but weak sentiment across the crypto market. Intense volatility triggered a brief sell-off on Tuesday, driving the remittance token to pick up liquidity at $1.53 before recovering to the current level.