HFM information and reviews
HFM
96%
FXCC information and reviews
FXCC
92%
FxPro information and reviews
FxPro
89%
FBS information and reviews
FBS
88%
Vantage information and reviews
Vantage
85%
MultiBank Group information and reviews
MultiBank Group
84%

BoJ Summary of Opinions reveals hawkish mood


8 August 2024 Written by Raffi Boyadjian XM Investment Analyst Raffi Boyadjian

Yen remains in the spotlight

The yen remained in the spotlight yesterday, with dollar/yen extending its recovery by as much as 2.5% after Bank of Japan Deputy Governor Shinichi Uchida played down the chance of another rate hike soon.

However, the recovery in dollar/yen was halted today as the Summary of Opinions from the latest BoJ decision revealed that some policymakers called for the need to continue raising interest rates, with one member saying that they should eventually be increased to at least 1%.

This revealed a different opinion to Uchida’s and encouraged market participants to add to their rate hike bets. From 74%, the probability of another 10bps hike by the end of the year went almost to 80%

Overly dovish Fed rate cut bets

The yen enjoyed massive flows lately due to a cocktail of developments, like the unwinding of carry trades, the larger-than-expected hike by the BoJ, as well as fears of a recession in the US, which prompted market participants to ramp up their Fed rate cut bets.

According to Fed funds futures, they are now expecting 110bps worth of reductions by the end of the year. On Monday, they were seeing 125, but the improvement in the ISM non-manufacturing PMI and the encouraging Atlanta Fed GDPNow model for Q3 encouraged them to scale some bets back.

The next test for Fed cut bets may be next week’s US CPI and retail sales data for July. However, even if the data points to some further slowdown in inflation, the dollar is unlikely to be massively sold as rate cut expectations suggest an already overly dovish positioning. Therefore, should traders get more signs that the US economy is not on the verge of recession, the greenback could even rebound somewhat.

Wall Street in the red, gold rebounds somewhat

Wall Street finished another session in the red with the Nasdaq losing around 1%, as tech firms saw their stocks sliding towards the end of the session.  The indices began the day higher, but they lost their momentum during the afternoon.

Perhaps the overcrowded short yen trade was not only aimed at benefiting from the higher-yielding dollar, but also at turning those dollars into stocks. Therefore, for Wall Street’s engines to start heating up again, dollar/yen may need to further recover, which could happen should market participants become less worried about the state of the US economy, even if that means fewer basis points worth of expected rate cuts.

Gold is slightly higher today, but still way off its record highs. The fact that the precious metal failed to gain during this turbulent period suggests that it was not a safe-haven choice for investors. Even after the weak US jobs data, gold failed to take advantage of the tumbling dollar and Treasury yields.

Perhaps it is all coming down to China again, as yesterday, data revealed that the People’s Bank of China held back from buying gold for a third consecutive month in July. On top of that, the fact that the Shanghai benchmark price of gold is declining faster than international prices suggests that retail demand in the world’s second largest economy is also cooling.

by XM.com

#source


RELATED

Geopolitics dictates market sentiment, but dollar fails to benefit

The markets reacted negatively to the perceived escalation and the aggressive rhetoric from both sides, with gold recording its best two-day rally since early March, when the markets were mentally preparing for the Fed rate easing cycle.

20 Nov 2024

Stocks cautiously edge up amid geopolitical and inflation risks

Equity markets were in a perky mood on Tuesday as a recovery on Wall Street helped Asian stock markets advance, although European shares were more mixed.

19 Nov 2024

US CPI report could reverse the post-election euphoria

President-elect Trump is gradually assembling his cabinet, with the market anticipating the most crucial appointment, the Treasury Secretary.

13 Nov 2024

Positive sentiment lingers despite mixed newsflow

The markets continue to digest Trump’s victory and last Thursday's Fed dovish rate cut, with most market participants now speculating on the course of action of the new administration as the president-elect is assembling his cabinet.

11 Nov 2024

Dollar pauses rally ahead of Fed, BoE meets as well

After hitting a four-month high on the heels of Donald Trump's return to the White House, the dollar is pulling back today, as traders may have decided to lock some profits after the sharp rally and ahead of the Fed decision later today.

7 Nov 2024

Dollar and stocks surge on Trump victory bets

The dollar skyrocketed during the Asian session today, and it appears to be headed for its biggest one-day gain since March 2020.

6 Nov 2024

Volatility returns with a vengeance ahead of key US events

The recent, relatively quiet, market sessions were interrupted yesterday, with a strong correction recorded in both equities and gold.

1 Nov 2024

Dollar maintains gains amidst fragile market conditions

Market participants are gradually preparing for an action-packed week, with Friday’s US jobs report being the key event, that also includes some major earnings releases. Alphabet will report today, followed by Microsoft and Meta tomorrow, and Amazon and Apple on Thursday.

29 Oct 2024

Tensions remain high in equities

The next Fed meeting will be held two days after the election date and, assuming an eventless election process occurs, Chairman Powell et al will evaluate the progress made since the September aggressive rate cut.

25 Oct 2024

Demand for safe assets lingers

The US dollar continues to enjoy strong demand, outperforming its main counterparts. In particular, euro/dollar is trading at the lowest level since early August, and dollar/yen is hovering a tad below the 151 area.

22 Oct 2024

Strong US data keep the dollar in demand

The euro suffered another weak session yesterday, with the euro/dollar pair dropping below the key 200-day simple moving average and euro/pound fully erasing the recent UK CPI-induced correction.

18 Oct 2024

US dollar and stock rally continues

Both the US dollar and main US equity indices enjoyed another strong session yesterday.

15 Oct 2024

Dollar baffled after mixed data and Fedspeak

China might have played a key role in gold’s performance, but, at the same time, it offers little assistance to the oil rally as the market remains very pessimistic about the impact of the new set of Chinese support measures.

11 Oct 2024

Dollar stands tall after robust jobs report

Strong US data dent chances of a 50bps Fed rate cut; Plethora of Fed speakers on the wires today. Dollar enjoys strong gains, stocks rally unexpectedly. Oil pushes higher as gold's retreat continues.

7 Oct 2024

Dollar gets a boost from Fed's Powell but will the move last?

Fed's Powell talks down expectations for another 50bps rate cut. Dollar benefits, US stocks shake off the initial negative reaction.

1 Oct 2024

PCE inflation corroborates dovish Fed bets

The dollar slipped against most of its major peers after Friday’s data revealed that the headline PCE price index slowed more than expected in August.

30 Sep 2024

Equities are on autopilot but cannot help the dollar

Increased expectations for another 50bps Fed cut. Dollar continues to suffer but euro's strength is perplexing.

25 Sep 2024

Global broker Octa deploys an AI-based tool for traders to boost trade analysis

Since the first days of Artificial Intelligence’s rapid expansion into various industries, the financial sector has been one of the leading adopters of these technologies.

24 Sep 2024

Markets digest Fed decision. BoE and BoJ stand pat

Dollar tumbles on bets of more aggressive Fed rate cuts. BoE keeps rates steady, reiterating cation about future cuts.BoJ stands pat, Ueda says more rate hikes are coming. S&P 500, Dow Jones and gold hit new record highs.

20 Sep 2024

Fed goes big with first rate cut

Fed lowers interest rates by 50bps. New dot plot signals another 50bps cuts by December. Wall Street closes in the red, futures point to higher open. BoE and BoJ take the central bank torch.

19 Sep 2024


Editors' Picks

Regulation Matters: Why a Licensed Forex Broker Should Be Your Top Priority

Choosing a regulated broker is not just a matter of preference; it is a necessity for safeguarding your investments and ensuring that you trade in a fair and secure environment.

Automating Success: The Benefits and Risks of Using Forex Expert Advisors

This article explores the benefits and risks associated with using Forex Expert Advisors, providing insights into how traders can maximize their potential while mitigating potential downsides.

Best Forex Brokers 2024

By prioritizing factors such as overall rating, regulatory compliance, trading conditions and platform reliability traders can make an informed decision that aligns with their trading needs and aspirations, setting the stage for a potentially prosperous trading journey.

The Top Forex Expert Advisors 2024: Performance, Strategy, and Reliability Review

An annual roundup reviewing the most successful Forex Expert Advisors (EAs) based on their performance, strategies employed, reliability, and user feedback. This piece would provide insights into which EAs have been market leaders and why.

The Evolution of Forex Expert Advisors: Navigating the Path of Technological Revolution

The concept of automated trading has been around for decades, but the accessibility and sophistication of Forex EAs have seen significant advancements in the past few years. Initially, automated trading systems were rudimentary, focusing on simple indicators like moving averages.

Best Forex EAs 2024 – Forex Expert Advisors Rating

Expert Advisors (EAs) Rating features high-quality Free and paid Forex EA most popular on the market today.

XM information and reviews
XM
82%
FP Markets information and reviews
FP Markets
81%
FXTM information and reviews
FXTM
80%
AMarkets information and reviews
AMarkets
79%
Octa information and reviews
Octa
79%
BlackBull information and reviews
BlackBull
78%

© 2006-2024 Forex-Ratings.com

The usage of this website constitutes acceptance of the following legal information.
Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website (reviews, brokers' news, comments, analysis, quotes, forecasts or other information materials provided by Forex Ratings, as well as information provided by the partners), including graphical information about the forex companies, brokers and dealing desks, is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Forex Ratings shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about the forex companies. The entire responsibility for the contents rests with the commentators. Reprint of the materials is available only with the permission of the editorial staff.
We use cookies to improve your experience and to make your stay with us more comfortable. By using Forex-Ratings.com website you agree to the cookies policy.