EUR/USD Most Closely Watched in The World

EUR/USD Most Closely Watched in The World, The EUR/USD currency pair is one of the most closely watched in the world,
and it has been under slight pressure recently.

Topics

EUR/USD: Examining Pressure
Unexpected Turn of Events
USD/JPY: Economic and Geopolitical Event

EUR/USD: Examining Pressure

The Euro has been relatively weak compared to other major currencies such as the US dollar,
which means that investors are less likely to buy into it.

This could be due to a variety of factors including economic uncertainty in Europe,
geopolitical tensions between European countries,
or even just negative sentiment towards certain European markets.

Despite this recent weakness of the euro, however,
some signs suggest its value may remain stable over time.

For example, many economists believe that Europe’s economy is still on track for growth
despite current volatility and political uncertainty –
meaning there could be a potential upside if these issues can be addressed successfully
by policymakers across Europe going forward.

Additionally, central banks have also taken steps to stabilize their respective economies
with various stimulus measures which should help prop up demand for euros over time as well.

Overall, then while we may see some short-term fluctuations in EUR/USD exchange rates
due to external factors like geopolitics or global market sentiment shifts;
longer-term trends suggest that this currency pair will remain stable overall
with only minor changes from the day-to-day trading activity being seen often
making them an attractive option for investors looking at long-term investments
rather than short-term speculation opportunities alone!

Unexpected Turn of Events

As the European currency continues to face uncertainty in the markets,
there is still a chance that it could rebound and reach recent highs at 1.0920-30 levels.

This would be quite a surprise as such an outcome has not been seen in some time now,
but with today’s rich agenda of macroeconomic data announcements from the US,
it might just be possible for this to happen.

The personal income, personal spending, and the University of Michigan Consumer Sentiment Survey
are all expected to have an impact on exchange rates however unless there is something unexpected
or surprising about these figures then breaking significant levels
will remain difficult for the EUR/USD pair on the last trading day of this week.

It remains unclear what direction things will take over the course of today’s trading session;
but if investors can show confidence in Europe’s economy,
then we may see EURUSD rise back up again and stay high by close off tonight,
which would certainly make for interesting news!

USD/JPY: Economic and Geopolitical Event

The US dollar-Japanese yen (USD/JPY) exchange rate has been in a tight range over the past few weeks,
and according to economist Lee Sue Ann and markets strategist Quek Ser Leang at UOB Group,
this trend is expected to continue in the near term.

The pair is currently hovering around 129.10 – 130.55 as it navigates within its established range of 128.00 – 130.80

Lee Sue Ann notes that USD appears to have moved into a consolidation phase
with no major breakouts or dips expected in the short term
unless there are any unexpected external developments such as an economic shock
or geopolitical event that could cause volatility in currency values across global markets

This stability comes despite recent news from Japan’s economy showing slowing growth
due to weak consumer spending and exports
which had put downward pressure on JPY against other currencies including USD.

Quek Ser Leang adds that while further upside movements cannot be ruled out entirely,
he believes investors should expect more of a sideways movement than anything else given current market conditions.

He also suggests traders may want to stay away from taking large positions
until some clarity emerges about how long this period of consolidation will last Overall,

It seems like USD/JPY will remain to navigate within its established range for now,
but traders should keep an eye out for any potential surprises
or outside factors that could bring about sudden changes in market sentiment.

Japan’s Economic Crisis

Japan’s Economic Crisis

Japan’s Economic Crisis, Japan is no stranger to market volatility as the world’s third-largest economy,

the country’s recent statement that it will enhance its foreign currency reserves shows that it is taking precautions to insulate itself from any future economic crisis.

Topics

Traders and investors rejoice
The Pair: Flipped
The Fed’s Gradual Ascent

Traders and investors rejoice

This action may signify improved stability in Japanese markets for traders and investors.

And, given the country’s large cash reserves, there may be chances for individuals wishing to invest in a range of assets. Whether you want to invest in stocks, bonds, or real estate, Japan might be a good place to put your money.

This is hardly surprising considering Japan’s recent announcement of an imminent economic stimulus plan.

The package is estimated to be valued at JPY25.1 trillion ($170 billion USD).

This is a large sum of money, and it is apparent that the Japanese government is serious about fueling its economy.

Some worry that the stimulus will be too big and will lead to inflationary pressures in the future.

Shunichi Suzuki, Japan’s Finance Minister, has addressed these worries, saying that “we will always take action against excessive actions.” It’s encouraging to see that the Japanese government is aware of potential concerns and is taking precautions to prevent them.

The Pair: Flipped

The USD/JPY pair is struggling to find impetus today, bouncing in a narrow zone during the first half of trade. #

The pair is now trading slightly over the 148.00 level, and comfortably inside yesterday’s trading range.

Because there does not appear to be a clear trigger driving price movement at the present,

we may see more of this choppy consolidation in the short term.

The US dollar has been hovering at a three-week low, which has proven to be a significant headwind for the USD/JPY pair.

Softer US macro data reported on Tuesday indicated hints of a slowdown in the world’s largest economy,

perhaps forcing the Federal Reserve to adopt a more hawkish position.

This resulted in another drop in US Treasury bond rates, which continues to weigh on the greenback.

The Fed’s Gradual Ascent

The Fed is still projected to raise interest rates by 75 basis points in November and to continue tightening policy,

albeit at a slower pace. The Bank of Japan, on the other hand, is sticking to its ultra-easy monetary policy.

As a result, the path of least resistance for the USD/JPY pair is to the upside.

However, bulls are hesitant ahead of the Bank of Japan meeting on Thursday,

which might give some guidance for future rate rises.

The USD/JPY pair is vulnerable to range-bound market behaviour as it approaches important central bank event risk.

Market participants are hesitant to make strong bets, which might lead to the present range being extended.

The US New Home Sales data will be issued later in the morning North American session and may offer some momentum to the market. However, bond rates and overall market risk sentiment will have an impact on the key currency pair.

Japanese investors dumping the Yen

Japanese investors dumping the Yen

Japanese investors dumping the Yen, Investors in Japan are increasingly turning to foreign currency deposits as a way to diversify their portfolios and take advantage of higher yields.

Topics
Benefits of Foreign Currency
Yen Weakness Impacting Japan
Against the Dollar
What the future holds for the yen?

Benefits of Foreign Currency

Bank of Japan data shows that foreign currency deposits at domestic banks surged 8.3% in the first eight months of this year, to 26.58 trillion yen ($182.38 billion).
This is the highest level since 2015, suggesting that investors are becoming more comfortable investing in overseas markets.

One key reason for this shift is that interest rates remain low in Japan, despite increases by other major central banks around the world.
This has made Japanese government bonds less attractive, especially compared to bonds from countries with higher yields.
For example, 10-year U.S Treasury yields are currently around 4 percentage points higher than equivalent Japanese government bond yields.

Investing in foreign currency deposits offers investors a chance to both diversify their portfolios and earn greater returns on their investment than they would by keeping their money in yen-denominated assets.

In addition, with the Bank of Japan unlikely to raise interest rates any time soon, the appeal of these investments is likely to continue.
The yen has weakened about 7% against the dollar this year and is trading near a two-year low.

Yen Weakness Impacting Japan

Some Japanese investors have been turning to foreign exchange margin trading to bet on further yen weakness.

The value of outstanding margin loans in yen terms hit a record high of $40.3 billion in August, up from $37.6 billion at the end of last year, according to data from the Tokyo Stock Exchange, “Foreign-currency deposits, a focus for relatively long-term investment,
increased along with yen depreciation this year and may have contributed to an extent to this year’s decline in the yen,”
said Lhamsuren Sharavdemberel, Barclays Bank analyst.

Foreign currency deposits have risen in popularity in recent months as the yen has fallen to 24-year lows.

Because retail investors may borrow up to 25 times their funds as leverage, margin trading volume increased to a record 1,229 trillion yen in June.

Given the current context of low-interest rates and prolonged yen weakening, analysts anticipate a significant rise in foreign currency deposits. At the end of June, households had a record 1,102 trillion yen in cash and savings, indicating that there is plenty of idle capital available for investment.

The increase in interest rates comes at a time when Japan’s central bank is attempting to arrest the yen’s slide with harsh interventionist measures.
Japan’s foreign reserves declined to $1.238 trillion at the end of September as a result of these measures, “Most of the increase, of course, is attributable to the change in valuations due to the weaker yen,” he said. But there was a big increase even after adjusting for nominal exchange rate changes in the yen”, said Lhamsuren.

Against the Dollar

The yen has been one of the biggest casualties of the dollar’s surge.
It is down 6% against the greenback this year and is now trading at its weakest level since early 2017.
While the yen originally rose following the intervention, it has now fallen back to roughly 145 against the dollar,
back to where it was before Japan’s major currency move.
The Japanese currency had recovered somewhat following intervention by the Bank of Japan in late September,
but it has since given up those gains and is back to where it was before the central bank’s move.

There are a few reasons for the yen’s weakness.
One is that Japan relies heavily on exports, so a strong dollar makes its products more expensive overseas and hurts demand.
The US dollar has been on a tear this year, thanks mostly to interest rate rises by the US Federal Reserve.
As a consequence of a dramatic market decline that has seen the S&P 500 drop 24% since the beginning of 2022, investors have sought refuge in secure assets such as dollars.

Additionally, with interest rates in Japan still near zero, there isn’t much incentive for investors to hold onto yen-denominated assets.
And finally, as China’s currency reserves have declined, there has been less demand for the yen as a funding currency.
The Chinese foreign currency declined from $3.055 trillion in August to $3.029 trillion in September.
Chinese officials blamed the drop on declining asset prices driven by the rising dollar.

What the future holds for the yen?

All things considered; it looks like the yen could continue to weaken against the dollar in the near term.
However, given that Japanese officials are likely to intervene if they feel that further depreciation would be harmful to their economy,
investors should keep an eye on developments in this situation.