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MTrading Team • 2022-10-12

USDJPY renews multi-year high even as US dollar struggles ahead of FOMC Minutes

USDJPY renews multi-year high even as US dollar struggles ahead of FOMC Minutes

Global markets turned volatile early Wednesday amid escalating hopes of market intervention from the UK and Japan as respective currencies drop. Also adding to the zigzag move could be the retreat in the Treasury bond yields even if the Fed bets remain hawkish.

USDJPY leads the G10 gainers while rising to a fresh 24-year high but the GBPUSD retreats of late as the BOE turned down rumors of prolonged bond-buying. 

USD Index (DXY) prints the first daily loss in six while reversing from a fortnight high but the AUDUSD hesitates to cheer a softer greenback amid downbeat comments from RBA policymaker.

Prices of gold and crude oil extend a bounce off the latest troughs as traders brace for today’s FOMC Minutes.

BTCUSD and ETHUSD snap a two-day downtrend with mild gains amid expectations that the bears are running out of steam.

Following are the latest moves of the key assets:

  • Brent oil bounces off weekly low to regain $95.00, up 0.60% intraday at the latest.
  • Gold snaps five-day downtrend around $1,670, printing mild gains on a day of late.
  • USD Index struggles around monthly top, down 0.05% near 113.20 by the press time.
  • FTSE remains indecisive but DAX and Eurostoxx are both printing mild losses as we write.
  • Wall Street closed mixed as Nasdaq lost 1.10% but Dow Jones gained 0.12%.
  • BTCUSD and ETHUSD both printed small gains near $19,200 and $1,300.
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No optimism despite softer yields, stimulus hopes

The risk profile remains dicey even as the US dollar retreats from the monthly top as fears of recession, as well as the central bank’s aggression, remain on the table. Also weighing on the sentiment is the latest IMF growth forecast that suggests more pain.

Treasury bond yields ease from the recently flashed multi-day tops amid mixed clues on the bond market. However, USDJPY cheers chatter that the Japanese policymakers are up for intervention as it crossed the 145.90 hurdle. 

NZDUSD and USDCHF are among the biggest gainers of the US dollar’s weakness while GBPUSD struggles over downbeat UK GDP and BOE’s determination to end the bond-buying on October 14.

Crude oil ignores US President Biden’s push to Saudi Arabia to delay the OPEC+ output cuts whereas gold and EURUSD also lick their wounds ahead of the key Fed Minutes.

Hopes that the leading crypto players will be able to give a tough fight to the US SEC joined the softer USD to help BTCUSD and ETHUSD pare some losses.

⏫ 🟢 Strong buy: USDJPY

⏬ 🔴 Strong sell: ETHUSD

⬆️ 🟢 Buy: USD Index, USDCAD, Nasdaq, EURUSD

⬇️ 🔴 Sell: DAX, FTSE 100, gold, BTCUSD, AUDUSD

Policymakers are in focus

Be it the diplomats from the UK, Japan and China or the FOMC Members’ comments during the last meeting, to be conveyed via Minutes, traders will have to widen their search for clear directions on Wednesday. However, the odds of the US dollar’s return to the buyer’s radar are high considering the latest aggression in the policymakers’ comments and the money market wagers.

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