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12 Oct 2021
3 min read

USD/JPY Continues Push to Nearly a 4-Year High, US Stocks Fall

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Key Takeaways

  • USD/JPY maintains its sprint to higher grounds as the rate eyes almost a four-year high
  • US stocks fall broadly amid sustained inflation fears and slowing growth; oil near $85 a barrel

What’s on Focus in the Markets?

The USD/JPY pair kept marching higher on Monday, extending previous gains to levels last seen in December 2018.

The USD/JPY rate has been among the biggest winners in the forex market this year. In more detail, since January, the exchange rate has rallied almost uninterrupted, gaining more than 10%. The pair opened for trading near 102.50 early in January. That said, on Monday, the USD/JPY surged a little over 1% to levels above 113.00. On Tuesday, the pair added to the gains to reach almost a 4-year high at 113.50 during the Asian session.

A strong US dollar has been shifting the valuations of other currencies in the market recently. For example, the EUR/USD, one of the most liquid pairs, is now trading at an 18-month low near 1.1550.

Meanwhile, stocks fell to start the week as traders retreated their risky bets amid continuing fears of inflation and slowing growth. On that note, the three main equity benchmarks declined after modest gains earlier in the day. The S&P500, the Nasdaq Composite, and the Dow Jones Industrial Average lost roughly 0.7% each.

What’s the Latest News on Bitcoin?

In cryptocurrency markets, the price of bitcoin continues to grind higher. The orange coin reached a six-month high of $57,800 on Monday and is currently trading near $57,300 a coin. Crypto enthusiasts have cheered improving regulatory expectations and bright prospects for the quarter.

To this end, as regulations are being hammered out in Washington, demand has been shifting gears. The most recent example of this is remarks from JPMorgan CEO Jamie Dimon. In a speech at the annual Institute of International Finance, Mr. Dimon called bitcoin “worthless”.

While this is not the first time he blasts bitcoin, he also noted JPMorgan clients disagree and want access to cryptocurrencies.

What’s New Around the Markets?

Traders and investors in the broader financial markets struggle to accommodate the prospects of high inflation coupled with slowing growth. With that in mind, US stocks have sunk in recent weeks or have logged only minor gains.

Inflation, in particular, has turned out to be more persistent than predicted. As a result, this has created supply-chain disruptions, market-labor jitters, and skyrocketing energy prices.

Against that backdrop, the price of brent crude, the international gauge of oil, surged to a three-year high on Monday. Supply shortages pushed the price of the raw material as high as $84.60 a barrel yesterday.

What’s Next for Traders and Investors?

Market participants will now shift their attention to the beginning of the earnings season. Major corporations in the US will kickstart the third-quarter reporting on Wednesday. More precisely, investment banking giant JPMorgan will deliver financial results for the quarter ended September. Additionally, the world’s largest asset manager BlackRock will also report earnings figures on Wednesday.

On Thursday, Domino’s Pizza will announce its third-quarter results. It will be joined by Morgan Stanley, Bank of America, Wells Fargo, and Citigroup. And on Friday, another Wall Street mainstay, Goldman Sachs, will reveal its performance during the past quarter.

Today’s Economic Calendar (EST times)

  • 02:00, UK, Average Earnings and Employment Update
  • 05:00, EUR, German ZEW Economic Sentiment (Oct)
  • 10:00, USD, JOLTs Jos Openings (Aug)

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