USDJPY Explosion Continues

Morning Update

The USDJPY pair has surged towards the 123.00 level during the Asian session after The Bank of Japan said it would be offering an unlimited amount of Japanese Government Bonds at 0.25 percent.

This action from the Japanese central bank was part of its yield curve control program, and also of its massive ongoing monetary policy looseness. The central bank’s target is for the 10-year JGB is around zero %. 

After the action, this quickly triggered big selling of yen against its major counterpart currencies. The USDJPY took out barrier options at 122.50, and traded to a high above 123.00, marking its highest level since late 2015.

Aside from the BoJ action, the US Treasury yield curve has inverted for the first time since 2006. This has happened as the Fed about to embark on a series of further rate rises after the lift off hike this month expectations of a recession ahead are rising.

With rate hike expectations no accelerating, the foreign exchange market is also starting to play catch up. The EURUSD pair has slid further under 1.10 even as UST yields surged.

Cable has also eroded all of last week’s gains and fell towards the 1.3150 area. The AUD and NZD were a little more mixed, both have fallen against the USD but finding some bidders due to commodity demand.

It should be noted that the Asian session was a soggy one, and most regional stocks were mostly down on the session. Higher yields, and the newly imposed Shanghai lockdown all weighed on sentiment.

Keep an eye later on Tesla’s stock price on the open today, after its factory was shut down in Shanghai lockdown. Halting production could hurt the company’s bottom line.

Oil prices remain extremely volatile due to the Iran nuclear deal. Some reports suggest that a deal is close to being signed. This is likely to drive oil prices in the immediate term.

Gold is down on the down, which is unusual considering its non-stop bid-tone on the Ukraine news and rise in the greenback recently. One potential reason why gold is Bitcoin.

Bitcoin is rallying to its highest level so far this year, as the top coin makes its way back towards its 200-day MA. A non-stop barrage of bullish news has helped the top recently.