After falling by more than 10% over the past two weeks, the Japanese yen finally saw a substantial decline after Japan's central bank promised that it would not raise rates as long as markets remain unstable.
➡️ The day just gone by saw the markets reverse their previous strong momentum in favor of the Japanese yen and against risk assets, as risk assets rallied strongly and the Japanese yen was finally sold off.. The yen's reversal appeared to be triggered by comments from the Bank of Japan's deputy governor that the Bank would not raise rates while markets are unstable. Moreover, the yen has risen so much in the past two weeks that it has become overbought and due for a correction anyway. .
➡️ Risk assets are broadly trading higher today and US Treasury yields are rising steadily from long-term lows hit earlier this week. The standout performer is the Japanese stock market, which saw the Nikkei 225 index rise in value today by more than 1.75%. Most other major stock indices globally are advancing, but it is worth noting that the NASDAQ 100 index recently entered correctional territory.
➡️ In the Forex market, the Japanese yen is the weakest major currency, while the New Zealand dollar is the strongest: the NZD/JPY currency pair rose above 3% during the Tokyo session alone. Trend traders will likely still be long on the EUR/USD currency pair after it made a bullish breakout earlier this week. The US dollar has been weak but has started to recover significantly after finding support. Day traders will be interested in trading the high volatility of the yen. There are yen pairs that have moved over 10% in value in just over two weeks, which is extraordinary.
➡️ Almost all risk assets are showing some bullish momentum at this point, so the direction that day traders should be trading today seems obvious, with stocks, Bitcoin , some commodities and commodity-related currencies, all strong against the Japanese yen or even the US dollar.
➡️ Earlier in the day, New Zealand's unemployment data showed a surprisingly strong economy, which helped lift the Kiwi today as the case for no rate cuts grows. The unemployment rate was expected to rise to 4.7%, but only reached 4.6%.
➡️ Data on inflation expectations for New Zealand will be released later.
Credit by DailyForex.com
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