CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
☰
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
✖

Kuroda is likely rolling his eyes as USD/JPY taps 145

Article By: ,  Market Analyst
September 14, 2022 12:26 AM
  • Market made sharp U-turns following the US inflation report, where CPI did not soften as much as expected.
  • US CPI rose 8.3% y/y compared with 8% expected, down from 8.5% previously. Core CPI rose 6.3% y/y from 5.9% previously. High food and rent prices were main drivers behind the price rises.
  • The US dollar was broadly higher with many major FX pairs producing daily engulfing candles. Most G10 pairs saw a daily range of >200% their average daily range.
  • Asian indices expected to endure a volatile and bearish day’s trade, if Wall Street is anything to go by. The Nasdaq 100 fell over 5% and closed at the low of the day, making the Nikkei a likely index to lead losses in today’s Asian session.
  • Odds of a 100bp Fed hike next week are now 33% (0% before CPI), and a 36.1% chance of rates raising to 4.75% by May 2023 according to money markets pricing.

 

 

Yield differentials pushed USD/JPY back up to 145, a move which likely has BOJ’s Kuroda rolling his eyes. We recently saw a concerted effort from the BOJ, MOF and government to jawbone the yen but with limited success. And part of that success could be attributed to a weaker dollar at the time. And with expectations of higher Fed rates and widening yield differentials in favour of the dollar, it could make further jawboning efforts feel like they’re shouting into the wind.

 

So perhaps the BOJ will be forced to defend the JGB market to weaken their currency once more, because in light of recent developments I suspect jawboning would be like shouting into the wind without an 'actual' intervention.

 

USD/JPY 1-hour chart

USD/JPY may be on the cusp of breaking to its highest level since 1998. Widening yield differentials remain favourable for a breakout with the only caveat being whether BOJ Governor Kuroda will try to jawbone the currency lower. As 145 is a big round number and previous swing high, we may see an initial retracement before the anticipated breakout arrives. But we’re at that stage of the rally where simply aiming for round numbers may suffice – for traders and BOJ or government officials. 

 

 

How to trade with City Index

You can easily trade with City Index by using these four easy steps:

  1. Open an account, or log in if you’re already a customer 

    • Open an account in the UK
    • Open an account in Australia
    • Open an account in Singapore

  2. Search for the company you want to trade in our award-winning platform 
  3. Choose your position and size, and your stop and limit levels 
  4. Place the trade

 

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.

© City Index 2024