Forexlive European FX News 12 Oct: JPY weakness reigns

More JPY weakness despite risk off start to session

Other markets

  • FTSE -0.35%
  • Dax +0.10%
  • CAC -0.48%
  • Bitcoin -0.52%
  • Gold+0.60 %
  • US oil +0.48%

More JPY weakness despite risk off start to session

The wall of worry spoken about in yesterday’s wrap returned overnight. The sheer list of concerns is telling in itself: Evergrande default anxiety, supply chain complexities and delays, inflation fears with even Japan bucking its deflationary trend, and energy prices precariously high all have traders angsty. 

However, the JPY remains stubbornly weak as some talk about the carry trade returning on a big central bank divergence as inflation is set to be managed by central banks hiking rates. Quite how that will help supply chain issues is still unclear, but that is nothing new to be in an unclear situation when trading is it? Will we see stagflation? Or will reflation win out? These are the questions that will be asked as we go forward. Just keep trading the little moves as each narrative seems to be winning is my strategy to pick my way through uncertainty.

Well, oil has reasons for strength and that is one constant worth keeping in mind.. Don’t forget this $77 level, as it should attract dip buyers. Nat gas tests its daily trendline and this will form a technical line in the sand. If the level holds then the uptrend is still in place

German ZEW data showed more confidence dipping in Germany. Not a surprise, but it does bring some added catalyst to EURGBP selling. This was helped as well by a fairly robust UK jobs report showing a dip in unemployment and an uptick in wages. However, don’t forget that the EU and the UK are trying to hack out the Northern Ireland protocol issues this week and that remains a headline risk.

For stocks, just keep an eye on the VIX. I gave a decent strategy out during the session and you will find it helpful as a quick gauge if you need a shibboleth to know whether to cross the threshold of a trade or not.

Ok folks, that is all from me. Justin returns tomorrow and normal service will resume. Been a pleasure as always.

Related Posts