The US Dollar / Yen currency pair rose firmly yesterday to trade at its highest price since 1986.
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The US Dollar strengthened a little yesterday as expectations of the Fed's rate-hiking path over the next year turned more hawkish, but it was weakness in the Japanese Yen that really made this move. Japanese Finance Minisister Katayama threatened that she will "take the necessary steps on Forex as required" - this is a threat to intervene to prop up the Yen, as has been done a couple of times fairly recently. The problem the Japanese financial establishment has is that Japan is up to its neck in debt, rates can't really be raised much, so what tools do they have to strengthen the Yen except by buying it with their foreign currency reserves? All pro-Yen interventions achieved is to buy a few weeks of time before the price comes right back to where it was, and beyond. The key takeaway: short JPY is an excellent long-term trade backed by fundamentals, technicals, and sentiment. If the US Dollar Index breaks out beyond 101.39 to new 1-year highs, we will see USD/JPY take off to reach even higher prices. I am already long of this currency pair. Apart from that, the Forex market has been very quiet today.
President Trump's 10% tariffs will be expiring soon, so new replacement tariffs are expected. Markets will be keeping an eye on that, and if there are any surprises, it could affect the relevant national currency values. In the spring of 2025, Trump's new tariffs then caused wild price movement in the Forex market.
Stocks are mostly trading a little lower today, after mostly gaining yesterday. We have not seen new highs in any major stock market indices since mid-June.
Gold and Silver have continued to strengthen, and we have seen important technical developments in both precious metals, with the price rising to break above key technical bearish descending trend lines. I won't be buying yet, but trend line break traders will be interested in going long here.
Bitcoin seems to have decisively broken above the key resistance at $65,233 to reach a new 1-month high price. This is a significant bullish development. Michael Saylor of Strategy will be breathing a big sigh of relief.
The USA / Iran confrontation has continued to produce kinetic conflict, with the USA and Iran trading fire for an eleventh consecutive day. Iran has fired on Kuwait, Bahrain, and Jordan, and killed US military personnel. Trump is threatening to start targeting infrastructure in an attempt to drive Iran to the negotiating tabIe. I have been writing here for a while that the US administration's pursuit of a "good deal" with the regime in Iran will never yield fruit and is incompetence and wishful thinking taken to a high level. Unfortunately, I am being proven right. The Strait of Hormuz is closed effectively 99% closed, with just a tiny trickly of crude oil shipping getting through, or any shipping for that matter. Spot WTI Crude Oil has risen again and now trades above $85 while Brent Crude Oil is trading above $90. These are 1-month highs. Yesterday Trump apparently rejected a proposed new truce and has talked about bombing a key Iranian nuclear site imminently.
UK CPI (inflation) came in a tick lower than expected, with the annualised rate falling from 2.8% to 2.6%.
There will be a release of Australian Unemployment Rate data later.