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On October 18, Kirill Dmitriev, Chairman of the Russian Direct Investment Fund (RDIF), stated that discussions regarding the tunnel project began after US President Trump and Zelensky mentioned it at the White House. Dmitriev had previously stated on the 16th that Boring Company technology could be used to build an intercontinental tunnel across the Bering Strait. He stated that the RDIF had studied existing proposals, including the US-Canada-Russia-China railway, and supported the most feasible option.On October 18, AFP reported that a source in the Ukrainian delegation revealed to the media that Ukrainian President Volodymyr Zelensky presented a map of potential targets in Russia to US President Donald Trump during their meeting in Washington, D.C., on Friday (October 17). The report quoted the source as saying, "The map shows pressure points in Russias defense and military economy that could be targeted to force Russia to end the war." As of press time, neither the White House nor Russia has responded to this report.1. All three major U.S. stock indices closed higher, with the Dow Jones Industrial Average up 0.52%, the S&P 500 up 0.53%, and the Nasdaq up 0.52%. American Express rose over 7%, and Apple rose nearly 2%, leading the Dow higher. The Wind US Tech Seven Index rose 0.86%, with Tesla up over 2% and Nvidia up 0.79%. Most Chinese concept stocks rose, with Futu Holdings up over 4% and Pony.ai down over 5%. For the week, the Dow Jones Industrial Average rose 1.56%, the S&P 500 rose 1.7%, and the Nasdaq rose 2.14%. 2. All three major European stock indices closed lower, with the German DAX down 1.61%, the French CAC 40 down 0.18%, and the UKs FTSE 100 down 0.86%. For the week, the German DAX fell 1.49%, the French CAC 40 rose 3.24%, and the UKs FTSE 100 fell 0.77%. 3. U.S. Treasury yields rose across the board, with the 2-year up 4.77 basis points, the 3-year up 4.96 basis points, the 5-year up 5.19 basis points, the 10-year up 4 basis points, and the 30-year up 2.66 basis points. 4. International precious metals futures generally closed lower. COMEX gold futures fell 0.85% to $4,267.90 per ounce, a weekly gain of 6.69%; COMEX silver futures fell 5.01% to $50.63 per ounce, a weekly gain of 7.15%. 5. The main U.S. crude oil contract closed up 0.46% at $57.25 per barrel, a weekly loss of 2.80%; the main Brent crude oil contract rose 0.46% to $61.34 per barrel, a weekly loss of 2.22%. 6. Most of the base metals in London fell, with LME tin futures down 2.07% to $35,030/ton, down 3.16% for the week; LME nickel futures fell 1.03% to $15,110/ton, down 1.11% for the week; LME zinc futures fell 1.03% to $2,942.50/ton, down 1.97% for the week; LME copper futures fell 0.38% to $10,607/ton, up 0.85% for the week; LME aluminum futures fell 0.36% to $2,778.50/ton, up 1.11% for the week; LME lead futures rose 0.31% to $1,971.50/ton, down 2.43% for the week.1. Hamas and Egypt discussed post-war security in the Gaza Strip. 2. Israels Defense Minister stated that those crossing the "yellow line" in Gaza would be met with retaliatory fire. 3. The UN Deputy Secretary-General entered Gaza and called for the opening of all crossings. 4. Guterres refuted Houthi accusations, posing a serious threat to the safety of UN personnel. 5. Market News: Pakistan "conducted precision airstrikes" in the Afghan border area. 6. Irans Foreign Minister stated that UN Security Council Resolution 2231 expires on the 18th, ending previous restrictions on Iran. 7. Sources: Afghanistan and Pakistan agreed to extend the 48-hour ceasefire until delegation-level talks can be held in Doha. 8. The Israeli Prime Ministers Office stated (in response to remarks by a senior Hamas official) that Hamas must disarm, "no ifs, no buts." 9. A senior Hamas official stated that it is impossible to definitively answer whether Hamas will give up its weapons. Hamas hopes for a three- to five-year ceasefire to rebuild Gaza, but stressed that it is not intended to pave the way for a new war.On October 18, local time, on October 17, US President Trump signed an executive order to impose a new 25% tariff on imported medium and heavy trucks and parts starting November 1. Trump said that a 10% tariff would also be imposed on imported passenger cars.

The USD/JPY is nearing 144.00 on rising rates and decreased risk appetite ahead of Powell's speech

Daniel Rogers

Sep 26, 2022 14:34

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The US dollar rose against the Japanese yen to a new intraday high of 143.60 as trading began in Tokyo on Monday, adding to the recovery gains seen on Friday. By doing so, the yen pair has reversed its decline from the 24-year high the day before, which had been brought about by Japan's action to protect the national currency.

 

The recent rise in the value of the yen may be attributable to Naoyuki Shinohara, Japan's former top currency ambassador. Shinohara told Reuters that Japan would focus on smoothing operations to reduce volatility rather than intervening in the currency market to protect a symbolic level, such as 145 yen per dollar.

 

From Thursday's highest levels since 1998, the USD/JPY quickly reversed course as Japan's senior currency ambassador Masato Kanda confirmed that they had intervened in the FX market. As he put it, the government "took significant action in the foreign exchange market."

 

Positive USD/JPY buyers are buoyed by rising US PMIs, rising Russia-Ukraine tensions, and hawkish central bankers other than the Bank of Japan (BOJ).

 

Recent US S&P Global PMIs for August, issued on Friday, showed an increase in the Manufacturing index to 51.8 from 51.5, and an increase in the Services index to 49.0 from 44.6. In a statement released on Friday, Federal Reserve Chair Jerome Powell said, "We are committed to employ our capabilities." Fed Vice Chair Lael Brainard then added that low-income people are feeling the effects of "hard" inflation. Despite the economy's continuing speed, Atlanta Federal Reserve President Raphael Bostic told CBS' "Face the Nation" over the weekend that he still believes the central bank can cut inflation without substantial job losses.

 

As President Zelenskiy of Ukraine was quoted as saying in a CBS interview, "Putin's nuclear threats may have been a bluff, but now it may be a reality," While Russia's foreign minister said annexing territory hosting widely criticized referendums would be met with complete protection from Moscow, the United States warned of "catastrophic ramifications" if Moscow utilized nuclear weapons in Ukraine.

 

As yields backed the US currency to remain strong despite aggressive Fedspeak and a rate hike, market fears caused Wall Street to close in the red. Although this occurs, S&P 500 Futures only fall by a few points as 10-year US Treasury yields climb by four basis points to 3.74 percent.

 

Going forward, USD/JPY buyers are expected to keep their upper hand while keeping a careful eye on any signs from Japan's engagement and words by Fed Chairman Jerome Powell, both of which are due out on Tuesday and Wednesday.

 

Although the recent higher lows and firmer RSI, which is not overbought, favor USD/JPY buyers, conviction requires a daily closing above the 13-day-old resistance line, now at 144.00 as of press time. Conversely, the downside is capped by the 21-day moving average around 142.25.

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