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Forex Today: China Rises, Japan Falls

Forex Today: China Rises, Japan Falls

Japan’s leadership change and China’s economic stimulus measures send stock markets soaring in opposite directions.

➡️ There are unusually strong moves today in Japanese and Chinese stock markets. The decline in Japanese stock markets was triggered by the primary victory of Mr. Ishiba, a well-known interest rate hawk, which raised the prospect of a faster pace of rate hikes by the Bank of Japan. This is also helping to strengthen the Japanese yen and we see the USD/JPY currency pair fall further to trade well below ¥142. In China, further stimulus measures in the real estate sector have boosted the stock market, which is racing ahead.

➡️ In the Forex market, the Australian dollar was the strongest major currency since the Tokyo open today, while the Swiss franc was the weakest. This indicates a continuation of risk sentiment.

➡️ Although US President Biden has vowed to work towards a ceasefire in the Middle East, the war continues unabated with Israel on the offensive in Lebanon, Yemen and Syria. It is unclear what capabilities Hezbollah retains in Lebanon, with many analysts believing it is likely that it still has at least half of its estimated 150,000 missiles. It may be that Hezbollah is unable or unwilling to launch more than the relatively light attacks it is currently conducting against Israel. Risk sentiment and the price of crude oil currently appear largely unaffected by the war, but that could change if Iran becomes involved, as Israeli Prime Minister Netanyahu vowed at the UN last Friday to retaliate against Iran if Iran attacks Israel.

➡️ Some soft commodities have been trading at or near elevated long-term prices, in particular cocoa and coffee.

➡️ China’s manufacturing PMI data came in slightly better than expected.

➡️ Preliminary data for the German consumer price index (CPI) will be released today, with the index expected to show a monthly increase of 0.1%.

 

Credit by DailyForex.com

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