FX Careers

General Market Analysis 26/09/23

Dollar Drives to Yearly High

The US dollar has driven to a yearly high after notching up its fourth straight positive trading day after last week’s hawkish Fed update. Concern in the market that higher Oil prices will push inflation higher and further away from the Fed’s target 2% has led to a charge higher in the greenback. Fixed income markets have also continued to push treasury yields north with the benchmark 10-year now trading up at 4.53% and stock markets remain choppy and vulnerable as the market continues to digest the potential for rates remaining higher for longer. Investors are now preparing for more of the same as the trading week progress with any rallies in risk likely to be hit hard.

JPY Hits 10 Month Low

The Japanese Yen has hit a 10-month low in trading today after the Bank of Japan advised markets that it will continue with its ultra-easy rate policy. Both the Governor and his deputy spoke on separate occasions and the message was the same – rates will remain accommodative for the foreseeable future. Traders had been looking for a change of policy after the bank had hinted that it was imminent just a few months ago but now BOJ policy could be at odds with the government which does not want to see excessive moves in the currency market – in reality, further Yen weakness. Be prepared to hear more about potential intervention again and for action to occur as one policy does not necessarily support the other. It could be a bumpy ride ahead for Yen traders in the next few weeks.

Momentum to Continue to Dictate Markets

There is little on the event calendar in the first two sessions of Tuesday’s trading day to excite investors and therefore the downwards momentum that markets have experienced over the last few days is likely to continue. There are some tier 1 releases due out in the New York session and this could see some further volatility. US Consumer Confidence, New Home Sales and Richmond Manufacturing Index numbers are all out at the same time and lower prints could ironically help the risk sentiment, however many feel that with the current conditions they could just be providing better levels to sell.