Top Regulated Brokers
The Japanese Yen is making a major bullish breakout. USD/JPY fell as low as 153.51 earlier today, far below the 156.00 area seen yesterday. The Yen has now gained almost 4% against the Dollar this month, making it the strongest G10 currency. It is supported by stronger Japanese economic data, with wages and revised GDP looking strong, increasing confidence that the Bank of Japan will raise its policy rate at its 17–18 September meeting. The market seems to regard this hike as practically inevitable. Japanese officials are hinting at continuous collusion with the US to prop up the Yen.
In the Forex market, the USD/JPY technical picture has changed decisively. The break below 155.00 invalidates the former bullish structure and opens the way towards the major support zone around 150.00. This is a very strong short-term bearish trend here. A sustained recovery above 155.00 would weaken this bearish case.
Crude oil has resumed its climb. Brent Crude is trading above $97, while WTI is near $92.60, both near six-week highs. The market is adding a larger risk premium as Iran threatens retaliation against further US attacks, raising the possibility of a prolonged interruption to energy flows through the Strait of Hormuz. However, despite the military escalation, flows through the Strait have reportedly remained above 9 million barrels per day, albeit at lower levels most recently seen in May. That suggests the market is currently pricing risk rather than a complete supply loss, so any clear de-escalation could trigger a sharp correction in oil prices.
The US Dollar is weakening ahead of Friday’s inflation data. The US Dollar Index has slipped as traders await the upcoming US CPI release. The market is pricing about a 60% probability of a 0.25% Fed rate hike at the upcoming 16 September meeting which is hardly changed from a week ago.
Agricultural commodities remain in powerful bullish trends. Corn, soybeans, and sugar continue to attract strong speculative buying, with speculative net-long positions at record or multi-year highs. Corn’s net long is at a record high, while soybean positioning is at its strongest since 2012 and sugar positioning is at its highest since late 2022. Trend traders will want to be long here, as historically, buying commodities breaking out to new long-term highs has been a very profitable trading strategy.