Japanese Yen, USD/JPY, Banking Sector, Treasury Yields – Asia Pacific Market Open:
- Japanese Yen weakens as US banking sector volatility calmed
- Traders began to cost out aggressive Fed fee cuts in a while
- Further positive factors in Treasury yields could push USD/JPY greater
Asia-Pacific Market Briefing – Markets Calm After a Volatile Monday
The Japanese Yen underperformed in opposition to its main counterparts on Tuesday. This was a day when international market volatility cautiously cooled following a aid rally in banking shares amid elevated uncertainty within the wake of final week’s collapse of Silicone Valley Bank. On Wall Street, the S&P 500 and tech-heavy Nasdaq Composite rallied 1.68% and a pair of.14%, respectively.
This is because the VIX market ‘fear gauge’ sharply reversed decrease, dropping 10.45% and hinting that the worst of the turmoil might need handed. There was a pointy push greater in front-end Treasury yields as merchants began to cost out anticipated fee cuts later this 12 months due to SBV’s collapse. In truth, over the previous 24 hours, about 30 foundation factors in tightening wre added again into the outlook for the six-month horizon.
This is the place the Japanese Yen is available in and why it underperformed. For starters, JPY is usually seen as an anti-risk foreign money, typically behaving equally to the US Dollar in occasions of market uncertainty. The revival in danger urge for food weighed on the foreign money. Then there’s the impact of rising Treasury yields given the still-dovish Bank of Japan. A comparatively extra hawkish Fed would sap the attraction of JPY versus USD.
Speaking of that entrance, February’s US inflation report crossed the wires. While the headline gauge clocked in as anticipated, the Core reading surprised higher on the month-to-month setting. This means that underlying inflation stays sticky, placing the Fed in a tricky spot.
Looking at Wednesday’s Asia-Pacific buying and selling session, notable financial occasion danger will stem from China. These embrace native industrial manufacturing and retail gross sales information. Outside of that, if markets proceed to calm within the hours forward, merchants could proceed including again Fed fee hike expectations. That could possibly be a recipe that enables USD/JPY to proceed greater.
Japanese Yen Technical Analysis
On the every day chart, USD/JPY was unable to fall underneath the 50-day Simple Moving Average (SMA), reinforcing the road as key assist. A bullish Golden Cross stays in play between the 20- and 50-day traces. Prices are additionally sitting on the 23.6% Fibonacci retracement stage at 133.05. A flip greater would place the give attention to highs from early March. Otherwise, extending decrease exposes February lows.
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USD/JPY Daily Chart
Chart Created in Buying and sellingView
— Written by Daniel Dubrovsky, Senior Strategist for DailyFX.com
To contact Daniel, comply with him on Twitter:@ddubrovskyFX
