There has not (yet) been a strong market reaction to the news that Biden is withdrawing from his re-election bid. Both the US yield curve and EUR/USD are trading close to where they were on Friday afternoon. While US politics could bring a lot of volatility this summer, today it is the Japanese Yen (JPY) that is again stealing the show in the FX market, notes Jane Foley, senior FX strategist at Rabobank.
JPY is the best performer in the G10
“JPY is the best performing G10 currency on a 1-day view. It is also the best performing G10 currency on a 5-day view and so far this month as speculators reduce their short positions. That said, the 100-day SMA provided decent support last week. To the extent that Trump’s trade implies a stronger USD, US politics will influence the outlook for USD/JPY this year.”
“It remains unclear whether the BoJ will see the justification for a move next week. The absence of any hawkish signals from the BoJ on July 31 could result in another rise in USD/JPY, particularly if Trump’s position in US opinion polls remains firm.”
“While there is plenty of room for near-term volatility in USD/JPY, we see increased chances for the JPY to regain ground later in the year, based on the assumption that a recovery in Japanese real wages will allow for a more hawkish BoJ. We maintain a 6-month forecast at 152.00.”
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
