Forex Today: Yen Keeps Falling, USD/JPY Breaks ¥121.50

The Japanese Yen continues to weaken on the BoJ’s standout dovish policies.

  • The Forex market is dominated by a weak Japanese Yen (influenced by the Bank of Japan’s pledge to continue monetary easing until its inflation target of 2% is reached) and a strong US Dollar. The USD/JPY currency pair continued to rise over the past day to trade at a new 6-year high above ¥121.50. It looks likely to advance higher still over the coming days.
  • British CPI (inflation) data released yesterday showed a higher than expected annualized rate of 6.2%, a fresh 30-year high. A rate of 6.0% had been expected. The British Pound fell following the release.
  • Markets have seen a recovery in risk sentiment over recent days, following the Fed’s 0.25% rate hike and measured but tough language last week, and Russia seemingly being fought to a near-standstill in Ukraine without any major escalation. This has boosted the price of stock markets and several agricultural and energy commodities, with crude oil rising (despite the Saudi Aramco pledging to double production) and cotton and soybeans trading at multi-year highs.

  • The Russian invasion of Ukraine is well into its fourth week, with the Russian advance clearly stalled by Ukrainian military force and logistical problems. Russian sources seem to have admitted its death toll is close to 10,000 soldiers killed. The US is warning of the possibility of Russian cyberattacks and a potential staging of a chemical incident in Ukraine. Russia earlier this week refused to rule out the use of nuclear weapons “if Russia’s existence is threatened”. NATO is reinforcing troop deployment on its eastern border.
  • There will be a release today of the Swiss National Bank’s quarterly Monetary Policy Assessment and Policy Rate, which is expected to remain unchanged at -0.75%, followed by the usual press conference. This may cause volatility in the CHF.
  • There will be a release today of German Flash Manufacturing & Services PMI data.
  • Daily new coronavirus cases globally rose last week for the second consecutive week for the first time since January, suggesting that the omicron variant is not going to disappear despite the recent huge wave of infection. It is estimated by the CDC that roughly one third of new cases are caused by the BA2 omicron sub-variant, which appears to be approximately 30% more infectious than the original omicron variant.
  • It is estimated that 64.1% of the world’s population has received at least one dose of a coronavirus vaccination, while approximately 6% of the global population is known to have contracted the virus at some stage.
  • Total confirmed new coronavirus cases worldwide stand at over 476.5 million with an average case fatality rate of 1.29%.
  • The rate of new coronavirus infections appears to now be increasing only in Australia, Austria, Cyprus, China, France, Italy, Laos, Luxembourg, Malta, Samoa, Thailand, Tonga, the UK, and Vanuatu.
Adam Lemon

Adam Lemon began his role at DailyForex in 2013 when he was brought in as an in-house Chief Analyst. Adam trades Forex, stocks and other instruments in his own account. Adam believes that it is very possible for retail traders/investors to secure a positive return over time provided they limit their risks, follow trends, and persevere through short-term losing streaks – provided only reputable brokerages are used. He has previously worked within financial markets over a 12-year period, including 6 years with Merrill Lynch.