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Japanese yen weakens to 1998 low as Nasdaq 100 soars, eyes on Asia-Pacific trade -by Ecork

JPY, USD/JPY, Wall Street, Nasdaq 100 – Asia Pacific Open Market

  • The USD/JPY currency pair rose to its highest level since 1998 as the Nasdaq 100 index rose
  • The yen continued to weaken after the Bank of Japan maintained a pessimistic policy
  • Will Nikkei 225, ASX 200 and Hang Sang Go Up on Wednesday?

Tuesday Market Briefing – Market rally around the world has dragged the JPY further

The anti-risk Japanese Yen was crushed on Tuesday as market confidence hit global bourses – see chart below. On Wall Street, futures tracking the Nasdaq 100, S&P 500 and Dow Jones rose 2.48%, 2.5% and 2.2%, respectively. During European trading hours, the Euro Stoxx 50 and FTSE 100 indices are up 0.7% and 0.42%, respectively. This is where the Japanese Nikkei 225 Index is up 1.84% while the Australian ASX 200 Index is up 1.41%.

Have the markets started pricing in the Fed’s next easing cycle? This does not seem to be the case. Treasury yields have not changed significantly over the past 24 hours. The US CPI headline forecast for 2023 barely rose from the end of last week. You can also look at the one-year break-even rate to gauge inflation estimates, it’s also not much changed from Friday.

With that in mind, it looks like there may be an exhaustion to start the shortened holiday week on Wall Street. We’re also approaching the end of the second quarter, and we’re opening the door for rebalancing activity.

This was bad news for the Japanese yen, which tends to underperform when market sentiment is generally rosy. As a result, risk appetite helped push the USD/JPY to its highest levels since 1998! last week , The Bank of Japan defended its ultra-loose policy Although overall inflation is now slightly above target. While it delivered some verbal punches against the rapidly weakening currency, it did nothing physical to defend it, leaving it vulnerable to what happened in the markets on Tuesday.

Japanese yen falls as stocks rise on Tuesday

Chart created in TradingView

Wednesday’s Asia Pacific Trading Session – Focus on Risk Appetite

Wednesday’s Asia-Pacific economic calendar is rather light, putting traders’ focus on risk appetite in general. The rosy session on Wall Street could mean some follow-up for the regional bourses, and may open the door for Hong Kong’s Hang Seng to rally along with the Nikkei 225 and ASX 200. This may continue to leave the Japanese yen at risk. However, it is still difficult to be Mainly bullish stocks at the moment.

USD/JPY Technical Analysis

The USDJPY pair surged higher above its resistance zone between 135.16 and 135.57, which was formed from the 2002 peak. This pushed it to levels last seen in 1998, exposing the 78.6% Fibonacci extension at 139.68. Confirmation of the breakout is not present at the moment as the negative RSI divergence continues. The latter is a sign of waning bullish momentum, which could precede a downward turn. In such a case, keep a close eye on the ascending trend line from March which may refocus on the upside.

USD/JPY daily chart

Japanese yen weakens to 1998 low as Nasdaq 100 soars, eyes on Asia-Pacific trade

Chart created in TradingView

– By Daniel Dobrovsky, strategic for DailyFX.com

To connect with Daniel, use the comments section below or Tweet embed on Twitter

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