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The French presidential palace stated that President Macrons attendance at the Franco-Italian summit will help deepen cooperation between the two countries in areas such as energy and defense.Britains new defense secretary: Investment plans are still being finalized.On June 12th, Morgan Stanley economist Bruna Skarica noted in a report that UK monthly GDP appears to be benefiting again from strong performance in the white-collar services sector, particularly the information and communications technology (ICT) industry. She pointed out that output in this sector is currently up 6.7% year-on-year, and has grown by 45.4% since the fourth quarter of 2019, while the overall economy has only grown by 6% during the same period. "It seems far from a coincidence that the sector most vulnerable to the rapid spread of artificial intelligence is simultaneously driving GDP growth and productivity gains," Skarica added. Given that the Bank of England stated last year that structural productivity growth in the UK was negative, the bank should comment further on this this year.On June 12th, HSBC analysts noted in a report that the US dollar is currently trading below levels implied by market expectations of US interest rates. They stated that the dollars reaction has been limited as recent market expectations have shifted from anticipated rate cuts to possible rate hikes. They believe this may reflect the loose financial environment in the US and market expectations for a resolution to the Middle East conflict. They added that the dollar needs clear stimulus from monetary policy. If the Federal Reserve fails to support rate hike expectations at next weeks meeting, the dollar "could be in trouble."On June 12th, analysts at Nomura Securities stated in a report that the Bank of England is likely to raise interest rates by 25 basis points in July to avoid the risk of a second wave of inflation. However, with inflation risks diminishing, they believe the Bank of England is likely to resume rate cuts in 2027. LSEG data shows that investors expect a 34% probability of a rate hike by the Bank of England in July.

The dollar against the yen is hovering near a three-year high! Risk sentiment remains weak

Oct 26, 2021 11:05

After testing a three-year high of 114.46 in Asian markets in early trading on Monday (October 18), USD/JPY consolidated above 114.00, and the bulls paused before resuming the upward trend.


The exchange rate closely follows the trend of U.S. Treasury yields, and the benchmark 10-year Treasury bond yields are also trending. Yields rose again and pushed up the currency pair to the multi-year top it hit last Friday.

However, the 10-year Treasury bond yield seems to be unable to break through 1.60% without follow-up buying, limiting the exchange rate to a 3-year high.

The decline in the exchange rate is still limited by the strengthening of the US dollar, because the market risk tone remains weak.

Concerns about the slowdown in global economic growth have resurfaced within the day, and the surge in oil prices has weakened market sentiment and supported the dollar bulls.

At the same time, Japanese Prime Minister Fumio Kishida said that he has no plans to change the sales tax. Since there are relatively few data in the United States, the exchange rate may be affected by broader market sentiment and yield price movements.

However, as the Fed’s hawkish expectations continue to rise, the Fed’s speech will attract more attention.

USD/JPY technical outlook


FXStreet analyst Christian Borjon Valencia explained, “The first resistance was at 114.54, the high of October 4, 2018, which is a key level. The exchange rate has been blocked four times in four years. If it breaks through this level, the exchange rate will rise further. Clear the obstacles and point to key resistance levels, such as the high of 115.37 on January 27, 2017, and then the high of 117.52 on January 9, 2017. On the other hand, if it breaks 114, it will open the door to decline, and the current RSI will exceed purchase. "

(Daily chart of USD/JPY)

At GMT+8 16:36, the USD/JPY traded at 114.35.

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