3 min to read
The USDJPY has recorded a further decline
settling within the mid-147 yen range during the London session.
“In the latest developments within the foreign exchange market, the USD/JPY has recorded a further decline, settling within the mid-147 yen range during the London session”
This downturn, reaching levels unseen since September 14th, underscores the prevailing strength of the yen. Concurrently, cross-yen pairs, including EUR/JPY, witnessing a decline to approximately 161.25, and GBP/JPY briefly dipping below 184.50, have also been subject to downward pressure. Against the backdrop of a temporary respite in the reduction of U.S. bond yields, the market has experienced notable fluctuations. Noteworthy is the discernible trend of heightened demand for the pound and a corresponding shift towards selling the euro.
Various factors contribute to the upswing in pound purchases. Firstly, the realization that the expected expansion of the UK fiscal deficit has not materialized as anticipated has created room for potential tax cuts, boosting investor sentiment. Additionally, statements emanating from influential figures at the Bank of England, such as Governor Bailey and Deputy Governor Ramsden, during parliamentary testimony have added to the momentum favoring pound purchases. Both officials have communicated a prolonged necessity for maintaining unchanged interest rates, expressing not only caution regarding the recent decline in inflation but also heightened awareness of persistent inflationary pressures stemming from wages and geopolitical risks in the Middle East. The GBP/USD momentarily surged to around 1.2554, contributing to the alleviation of overall pressure on the dollar.
In contrast, the EUR/USD, having peaked near 1.0965 during the early Tokyo afternoon, experienced a mild retracement to around 1.0940 in the subsequent London session. Lithuania’s central bank governor, Simkus, while acknowledging the persistent inflationary pressures, explicitly stated that there is currently no justification for deliberating additional rate hikes in December.
As of now, the USD/JPY is actively traded within the mid-147 yen range, having reached a pinnacle near 148.42 in the early Tokyo session, subsequently encountering selling pressure. Trading dynamics have manifested as a blend of buying and selling activities within this mid-147 yen range, following a brief dip to around 147.15 in the early London session. U.S. 10-year bond yields experienced a momentary decline to around 4.38%, but subsequently demonstrated resilience, stabilizing around the 4.41% mark.
Meanwhile, the EUR/USD is positioned within the mid-1.09 range, initially marking a low near 1.0939 in the early Tokyo session before gradually ascending. While reaching a peak near 1.0965 during the Tokyo afternoon, the upward momentum was tempered during the London session, resulting in a retracement to around 1.0940. The EUR/JPY, after attaining a high near 162.43 early in the Tokyo session, exhibited a subdued trend, fluctuating within the mid to late 161 yen range. An interim decline to approximately 161.25 occurred during the early London session, indicating prevailing euro selling against the pound.
Simultaneously, the GBP/USD is currently trading in the early 1.25 range, initially marking a low near 1.2500 in the early Tokyo session. Subsequently, a resurgence in buying momentum ensued. Following a consolidation period around 1.2530-40, the pair surged to around 1.2554 in the London morning. The GBP/JPY, having reached a high near 185.65 in the early Tokyo session, encountered resistance, resulting in a pullback to around 184.47 during the early London session before rebounding to the 185 yen range. Conversely, the EUR/GBP is displaying weakness, declining from around 0.8750 to the 0.8720 range, influenced by the hawkish stance expressed by Bank of England officials during parliamentary testimony, prompting a shift towards pound buying and euro selling.
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