- USD/JPY has rebounded after dropping below 131.00 following US Biden’s SOTU commentary.
- US Biden has proposed taxing billionaires by raising the tax slab of corporate buyback four times.
- A recovery from USD/JPY indicates that the impact of BoJ’s stealth intervention is fading away.
The USD/JPY pair has sensed a buying interest after correcting below 131.00 in the Asian session. The asset has picked demand as the risk profile expresses caution amid commentary from US President Joe Biden while addressing his second State of the Union (SOTU) and first in front of a divided Congress.
A consideration of taxing high net-worth individuals in the United States by quadrupling the tax on corporate stock buybacks has resulted in some losses in the S&P500 futures. Apart from that, a proposal to pass legislation to stop big tech from collecting personal data on children might weigh on the 500-US stock basket futures. Therefore, a decline in the risk appetite of the market participants is highly expected.
About relations with China, US Biden commented, “We are committed to working with China where it can advance American interests and benefit the world, “If China threatens US sovereignty, the US will act to protect the country.
The US Dollar Index (DXY) is demonstrating a subdued performance as the hawkish interest rate guidance from Federal Reserve (Fed) chair Jerome Powell on Tuesday failed to improve the safe-haven appeal. Fed Powell shrugged off rumors about a pause in the policy-tightening spell by the Fed, citing that the strong labor market report is why the central bank believes that a hasty decision of sounding dovish could trigger inflation projections on a higher side.
The USD Index displayed sheer volatility despite Minneapolis Fed President Neel Kashkari told CNN Tuesday that the labor market is still too hot and that it makes it harder to bring inflation down, as reported by Reuters. He further added, "We may have to hold rates at a higher level for longer,"
On the Japanese Yen front, the impact of the Bank of Japan (BoJ) stealth invention in the FX domain to support the Japanese Yen is fading away. The street expects the forecast for the Japanese Yen to be based on BoJ Governor Haruhiko Kuroda’s successor selection.
A note from OCBC states, “Focus this week will be on the list of BoJ nominees that will likely be presented to parliament on 10 February though reports suggest a delay to next week. Amamiya’s appointment would be most supportive of the USD/JPY upside, while Yamaguchi’s appointment could weigh down the Japanese Yen.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD consolidates modest rebound around 1.0650
EUR/USD is about to end the week hovering around 1.0650, slightly below the level it had a week ago. Earlier on Friday, the pair bottomed at 1.0614, the lowest intraday level since March. The US Dollar lost momentum late on Friday on lower Treasury yields.
GBP/USD heads for lowest weekly close since March
GBP/USD is holding firm with weekly losses, unable to move away from 1.2200. The Pound is among the worst performers of the week after the Bank of England's decision to keep interest rates unchanged.
Gold consolidates above $1,920 ass US yields edge lower
Gold price clings to small recovery gains above $1,920 following Thursday's sharp decline. Following the mixed September PMI data from the US, the benchmark 10-year US Treasury bond yield is down nearly 1% on the day at around 4.45%, allowing XAU/USD to stay in positive territory.
Stablecoin exodus: Why are investors fleeing crypto’s safe haven?
In a year filled with uncertainty in the cryptocurrency space, a new trend has been unraveling: a stablecoin exodus that has now lasted for 18 consecutive months and has seen the market dominance of stablecoins drop to 11.6%.
Cainiao subsidiary to register for IPO as soon as next week
BABA stock surged more than 4% in Friday’s premarket after the Chinese ecommerce leader announced that its shipping and logistics business, Cainiao, will file for an initial public offering (IPO) in Hong Kong as soon as next week.