Where is USDJPY Heading?

The US dollar has been facing downward pressure due to changing economic indicators and market expectations around US yields and monetary policy. A key currency pair, USD/JPY, recently showed significant volatility. During the US trading session, USD/JPY surged, rising two big figures from a low of 151.94 seen during London's morning trading on last Friday. This followed a sharp drop from a high o

The US dollar has been facing downward pressure due to changing economic indicators and market expectations around US yields and monetary policy. A key currency pair, USD/JPY, recently showed significant volatility. During the US trading session, USD/JPY surged, rising two big figures from a low of 151.94 seen during London's morning trading on last Friday. This followed a sharp drop from a high on July 3rd, possibly due to intervention on July 11th.

The recent uptick was driven by a stronger-than-expected Q2 real GDP growth of 2.8%, surpassing the 2.0% consensus. Robust consumer spending, alongside higher government spending and capital expenditures, contributed to this growth. However, these data points reflect past conditions, not future trends. Current indicators suggest a slowdown in the US economy, which may lead to a more accommodative monetary policy stance.

Yield Curve Inversion

The yield curve, especially the 2-year and 10-year Treasury yields (2s10s), is a critical indicator of economic health and market expectations. The current inversion, which began in July 2022, is the longest in recent history and often signals a recession. While past inversions have sometimes led to a weakening dollar, there have been exceptions. For example, the brief inversion before the COVID-19 pandemic initially strengthened the dollar before it weakened. After the 2000 inversion, strong foreign direct investment (FDI) inflows kept the dollar robust.

Currently, the 2s10s inversion has narrowed to -15 basis points, the smallest negative spread since July 2022. This could indicate changing market dynamics, potentially influenced by stronger GDP growth. However, broader economic indicators like weakening labour markets, easing inflation, declining confidence, and housing market weakness could prompt the Federal Reserve to signal potential interest rate cuts soon.

USD/JPY and Market Correlations

The relationship between USD/JPY and other market indicators, such as the VIX (a volatility measure), is also important. Typically, when US front-end yields fall, the yen, seen as a safe-haven currency, tends to strengthen. Although higher US yields and inflation have recently diminished the yen's appeal, there's a potential resurgence of the yen's safe-haven status. The 10-day rolling correlation between USD/JPY and the VIX has turned negative again, suggesting that falling US yields may lead to a stronger yen against the dollar.

US Elections and Market Implications

As the US elections approach, political developments are becoming more significant. Vice President Kamala Harris has improved her net favourability rating, closing the gap with former President Donald Trump, though Trump still leads in key swing states. The financial market implications of the election are complex. Unlike the 2016 election, a Trump victory in 2024 might not provoke the same market reactions. This is partly because a Trump win wouldn't be as surprising as in 2016, potentially reducing market shock. Additionally, the Federal Reserve's current stance is different; in 2016, the Fed was tightening, while it may now be easing. The sequencing of Trump's policies, particularly around trade and tariffs, also remains uncertain.

This content may have been written by a third party. ACY makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplies by any third-party. This content is information only, and does not constitute financial, investment or other advice on which you can rely.

Regulacja: ASIC (Australia), FSCA (South Africa)
read more
ATFX Market Outlook 9th July 2025

ATFX Market Outlook 9th July 2025

On Tuesday, U.S. President Donald Trump escalated the global trade war by announcing a 50% tariff on imported copper and reiterated that long-threatened tariffs on semiconductors and pharmaceuticals are also imminent. U.S. equities ended mixed as investors awaited further clarity on trade policy. The Dow Jones Industrial Average fell 0.37%, the S&P 500 dipped 0.07%, while the Nasdaq edged up 0.03%
ATFX | 17g 45 minut temu
Central Bank Outlook and Trade Shift Sentiment | 8th July, 2025

Central Bank Outlook and Trade Shift Sentiment | 8th July, 2025

On July 8, gold slips below $3,350 as risk appetite improves. Silver holds steady near $36.90, while AUD/USD rises to 0.6855 ahead of the RBA decision. USD/JPY surges above 161.00 as BoJ tightening bets fade. PBOC sets USD/CNY at 7.1534, signaling stability. Focus now shifts to US CPI, central bank guidance, and trade progress for market direction.
Moneta Markets | 1 dni temu
ATFX Market Outlook 8th July 2025

ATFX Market Outlook 8th July 2025

U.S. President Trump signed an order delaying “reciprocal” tariffs from July 9 to August 1 and warned of steep hikes from that date, escalating trade tensions. U.S. stocks closed sharply lower, with the Dow down 0.94%, the S&P 500 falling 0.79%, and the Nasdaq dropping 0.92%. Tesla also tumbled after Elon Musk announced plans to launch a new political party.
ATFX | 1 dni temu
Yen Weakens as Japanese Data Sends Mixed Signals

Yen Weakens as Japanese Data Sends Mixed Signals

The USD/JPY pair edged higher on Monday, reaching 144.81, as the yen relinquished its earlier gains. The currency faced downward pressure following the release of disappointing wage figures, which dampened expectations for further monetary policy tightening by the Bank of Japan.
RoboForex | 2 dni temu
ATFX Market Outlook 7th July 2025

ATFX Market Outlook 7th July 2025

U.S. dollar weakened against major currencies after President Trump’s landmark tax cut bill was passed, amid mounting pressure on countries to strike trade deals with Washington. As markets brace for the July 9 tariff deadline—targeting countries like Japan that have yet to reach agreements—the dollar index slipped 0.1% to 96.92.
ATFX | 2 dni temu
ATFX Market Outlook 4th July 2025

ATFX Market Outlook 4th July 2025

The U.S. economy added 147,000 jobs in June, beating expectations of 110,000, while the unemployment rate fell to 4.1%. Traders are now betting that the Fed is unlikely to cut rates before September. Meanwhile, the House narrowly passed Trump's major fiscal bill by a vote of 218 to 214. U.S. stocks rallied on Thursday, hitting fresh record highs.
ATFX | 5 dni temu
Rate Shifts Steer FX Markets as Silver Holds Strong

Rate Shifts Steer FX Markets as Silver Holds Strong

On July 3, silver stays firm above $35.40 as Fed cut bets persist. EUR/USD holds near 1.1800, while GBP/USD lingers near 1.3585 ahead of UK jobs data. JPY strengthens after BoJ signals a hawkish pause. AUD/USD slips on weak trade surplus. Focus turns to US NFP and ISM data for market direction before the US holiday break.
Moneta Markets | 6 dni temu