The
weakening yen is unpopular in Japan and pressure is mounting on politicians for
action but there are no easy answers. I spoke with BNNBloomberg about the issues:

1) Rate differentials are the driver. You
can buy a 10-year Japanese government bond and get 0.9% per year or buy a US 10
and get 4.7%. Add in the weakening currency and there is a tidal wave of money
chasing this trade, which is a classic carry trade.

2) Intervention is an option but the
long history of intervention shows that it only helps when fundamentals are
improving. The Japanese government – which order the intervention – waved a bit
of a white flag this week in saying that it wasn’t currently weighing
intervention. That was a blunder because it gave the market the green light to
push further.

3) There was some hesitancy to push the
yen lower ahead of the Bank of Japan. In March they hiked rates for the first
time in 17 years and there was some angst they could tee up another move but
the decision was benign. They laid out an indeterminate timeline on hiking if
economic forecasts unfold as they hope.

4) Inflation isn’t rising. Somehow
Japan avoided the inflationary perfect storm that hit the rest of the world and
now prices are moderating. Today Tokyo reported CPI at 1.6% compared to 2.2%
expected. Now the miss was largely due to a one-off change to high school
tuition rates and the market picked up on that but it’s a headline that won’t boost
inflation expectations.

So what are
the options? The Japanese government can spend more to boost growth but that’s
hasn’t worked and the country is enormously indebted. There have been some
positive wage indications this spring but those will take 2-3 years to become
ingrained and hiking now would send the wrong signal.

So the
relief valve is the currency and it’s tough to see a floor.

What Japan –
and much of the world – is hoping for is a turn in the US dollar and global
inflation. If other central banks begin cutting then those rate differentials
narrow. Alternatively, if a recession looks like it’s on the horizon, there
will be a surge in the yen.

With a
carry trade, the money moves steadily and slowly but when there is trouble, it’s
a race to the exits. Back just before the financial crisis, there was this same
dynamic and money was flowing into the high-yielding AUD and NZD it unwound at
breakneck pace, including days with 10% currency moves.

But all they
can do right now is wait.

What’s driving the US dollar side of the trade

The dollar
bid right now is driven by inflation fears and specifically the fear that the
Fed will have to hike again. I think we’re close to the point of maximum
pessimism on that front.

The market
initially focused on this week’s US inflation numbers – which were hot – but eventually
pivoted to focusing on growth. If you look at good’s prices, they’re flat y/y
and Wal-Mart on Thursday emphasized that and was even talking about lowering meat
and vegetable prices.

The US
government is also running a deficit at 7% of GDP (compared to 1.4% in Canada).
I think the US dollar ultimately turns when the fiscal belt tightens, which isn’t
going to be until late 2025 at the earliest, though maybe the market starts to
price it in after the election, depending on the results.

This article was written by Adam Button at www.forexlive.com.

At ForexLive, we work in the news business and I make it our mission to deliver news and analysis that can help people make money in financial markets, or at least understand what’s going on.

I’ve always gravitated towards financial news because it’s the one industry where there’s a scorecard. You can still get away with lies for a time (probably for too long) but if the profits or jobs don’t materialize, then there’s a price to pay. Ultimately though, you get paid to be right and by having a worldview that reflects reality.

Unfortunately, long-term thinking (and investing) are in decline. All news is geared to stirring emotions now and the strongest emotions are fear and anger. I can tell you, it’s much easier to generate traffic with those kinds of stories and headlines. What’s happened in the past 15 years is that everyone else has figured that out.

Angry and scared people click and it’s created some kind of doom-loop dopamine fix that far too many people are addicted to.

There are consequences. I’m amazed — though not surprised — by this chart from Ben Carlson today showing deteriorating views of local and national economies but a steady view of personal finances.

There are many similar examples.

Objectively, we can see that US unemployment is at historically low levels and yet people are pessimistic. It’s not only in the US either, though I think the toxicity of US political news is particularly bad.

Carlson argues that this is mostly symptomatic of the volume of news that people are consuming. We used to read newspapers perhaps once a day or watch an hour of somewhat balanced TV news. Now it’s all day long and the algos serve up headlines designed to drive engagement. Nine times out of ten, the engagement bait is fear and anger.

That’s bad news for all of us and dangerous for investors. What happens when truly bad times come? Will there be violence?

For investors it’s a trap too. Stories predicting crashes get 10x the attention than those predicting booms and those predicting ongoing moderate gains are ignored completely. In investing, the big money is always in the holding and in letting winners ride. Every headline you read makes keeping a calm head that much harder.

It’s not all downside though. Fearmongering in the news can lead to overshoots to the downside in markets as well and that will continue to create opportunities for people who have hardened themselves to the fear-cycle. But I’ll warn: it’s much easier to be fearful when others are greedy than it is to be greedy when others are fearful.

This article was written by Adam Button at www.forexlive.com.

• US stocks end a solid week with strong gains. NASDAQ leads the charge.
• EURJPY gets close to 2008 high at 169.96. Break above and trading at 32-year-high
• Crude oil settles at $83.85
• Key event and releases for the trading week starting April 29
• Baker Hughes oil rigs down to 506 vs 511 last week
• European indices close higher for the day/week. UK FTSE 100 closes at a record level.
• Citigroup now sees 100 basis points of cuts this year from July
• Atlanta Fed GDPNow estimate for Q2 growth 3.9%
• University of Michigan April consumer sentiment (final) 77.2 versus 77.9 estimate
• WH Brainard: Work to bring costs down are ongoing
• Kickstart the FX trading day for April 26 w/ a technical look at EURUSD, USDJPY and GBPUSD
• US March PCE core inflation 2.8% YoY versus 2.7% expected
• The AUD is the strongest and the JPY is the weakest as the NA session begins
• ForexLive European FX news wrap: Japanese yen volatility ramps up after Ueda presser

The JPY pairs all rose sharply (JPY lower) as JPY selling continued after the BOJ rate decision.

The comments from BOJ Ueda did not strike any fear in traders hearts, after saying that the JPYs fall could lead to higher inflation, but expressed no concerns about its fall.

After, an initial dip soon after the announcement to near 155.00, buyers quickly reentered. The USDJPY is extending to a new session high at 158.292 going into the last minutes of trading today. The high price from 1990 at 160.40 is within reach.

The JPY moved the most vs the AUD with a fall of -1.92%. It fell -1.69% versus a US dollar and -1.59% versus the Canadian dollar.

Looking at the JPY crosses:

• The AUDJPY traded to it’s highest level since April 2013
• The EURJPY traded at its highest level since July 2008
• The GBPJPY surpassed its 2015 high, and traded to the highest level since 2008.
• The NZDJPY traded briefly above its 2014 high price and to the highest level since July 2007
• The CHFJPY is trading to its highest level at least going back to 1973.
• The CADJPY traded to its highest level since December 2007.

Looking at the strongest to weakest of the major currencies, the AUD and the USD were the strongest today.

Today in the US session, core PCE for the month March was released and came in better than expectations. After the US GDP yesterday showed core PCE for the first quarter higher than expectations, the fear was for a rise of 0.4 – 0.5%. The actual increase for the month came in 0.3%. The year-on-year stayed unchanged at 2.8% which was 0.1% higher than the 2.7% estimate.

Coming off stronger earnings from Microsoft and Alphabet after the close on Thursday, stocks got another boost. The gains were led by the NASDAQ index which rose over 2% on the day and by 4.23% for the trading week. That was the best week since October 2023. The S&P index rose 1.02% today, and its week gain of 2.67% is good enough for its best performance since October as well.

In the US debt market, yields are ending the day lower but off their lowest levels. Yields are still higher for the trading week:

• 2-year yield 4.995%, -0.3 basis points
• 5-year yield 4.6%, -2.8 basis points
• 10-year yield 4.665%, -4.1 basis points
• 30-year yield 4.776%, -4.3 basis points

For the trading week:

• 2-year yield up 1.0 basis points
• 5-year yield up 1.7 basis points
• 10 year yield up 4.2 basis points
• 30-year yield up 6.4 basis points

in other markets this week:

• Crude oil rose $1.42 or 1.73%.
• Gold fell $-54.06 or -2.26%
• Silver fell $-1.48 or -5.12%
• Bitcoin fell $-1038 or -1.60%

This article was written by Greg Michalowski at www.forexlive.com.

The US major stock indices surged higher today led by the NASDAQ index which rose over 2.0%.

The catalyst was lower than anticipated core PCE data released by the Federal Reserve. That inflation measure is the favor measure of inflation by the Fed. Given the GDP day yesterday with the quarterly core PCE data higher than expectations, the fear was a surprise to the upside today. The MoM came in as expected 0.3%. There was rumblings of a +0.4 – +0.5% level after the data yesterday.

The final numbers today are showing:

• Dow Industrial Average average of 153.84 points or +0.40% at 38239.67.
• S&P index up 51.54 points or 1.02% at 5099.95.
• NASDAQ index up 316.14 points or 2.03% at 15927.90.

The small-cap Russell 2000 rose 20.8 points or 1.05% at 2001.99.

For the trading week, the S&P and NASDAQ indices had their best week since October 30, 2023.

• Dow Industrial average rose 0.67%
• S&P index rose 2.67%
• NASDAQ index rose 4.23%
• Russell 2000 rose 2.79%.

Gains today were led by:

• Snap, +27.46% after beating earnings
• Alphabet, +10.22% after its earnings
• Super Micro Computers +8.9%. They will announce earnings next week.
• Nvidia, +6.18%. Nvidia won’t announce until later in May.
• Broadcom, was 3.84%
• Amazon, +3.43% (Amazon will announce next week)

The big losers today included:

• Intel, -9.2% after disappointing earnings.
• Exxon Mobil -2.60%. It too missed on earnings
• Paramount -2.60%
• Ford Motor -2.07%
• American Airlines -1.77%

Next week, the following companies will announce their earnings (* after the close):

Monday, April 29

• Domino’s Pizza
• Phillips
• Paramount*
• Logitech*

Tuesday, April 30

• PayPal
• Lily
• 3M
• McDonald’s
• Coca-Cola
• Amazon *
• AMD*
• Super Micro Computers*
• Starbucks*
• Pinterest

Wednesday, May 1

• Pfizer
• CVS
• MasterCard
• Marriott
• Qualcomm *
• Carvana *

Thursday, May 2

• Peloton
• Moderna
• Apple *
• Coinbas *
• Block *
• DraftKings *
• Fortinet *

Friday, May 3

• Hersey

This article was written by Greg Michalowski at www.forexlive.com.

The EURJPY has reached a high of 168.8942. That is down the price within the 100 pips of the high price going back to July 2008 at 168.941. Trading above that level would take the pair to the highest level since September 1992.

Traders may look to lean against the high ceiling area from 2008 with stops on a break above (see red number circles in yellow area on the chart above). However, if it is like the USDJPY, be careful.

The USDJPY moved above the 155.00 level this week (on Wednesday) and apart from a flush out immediately after the rate decision today, has been trending higher. The USDJPY price currently trades at 157.864

This article was written by Greg Michalowski at www.forexlive.com.

The price of the WTI crude oil settled on Friday at $83.85. The price settled up $0.28 or 0.34%.

The high-price today reached $84.46. The low price was at $83.35.

For the trading week, the price is trading higher by $1.54 or 1.87%.

• The Baker Hughes weekly rig count showed a decrease in total rigs to 613 from 619, with oil rigs down by five to 506, and natural gas rigs moved down by one to 105.
• Concerns about a „Rafah operation,“ remains a potential geopolitical risk. Meanwhile, the tensions between Iran and Isreal have abated.

This article was written by Greg Michalowski at www.forexlive.com.

Headlines:

• USD/JPY returns to the highs for the day after flash in the pan drop
• USD/JPY hits the skids in fall to 155.00
• USD/JPY ramps higher as Ueda loses control
• BOJ governor Ueda says chance of a prolonged weakness in the yen is not zero
• BOJ governor Ueda says will adjust degree of monetary easing if underlying inflation rises
• BOJ governor Ueda says will continue to watch impact of FX on economy, prices
• SNB’s Jordan says central bank has been successful in fighting inflation
• France April consumer confidence 90 vs 92 expected
• Eurozone March M3 money supply +0.9% vs +0.6% y/y expected
• ICYMI: Trump advisers consider penalties for nations shifting away from the US dollar

Markets:

• AUD leads, JPY lags on the day
• European equities higher; S&P 500 futures up 0.8%
• US 10-year yields down 1.4 bps to 4.692%
• Gold up 0.5% to $2,344.29
• WTI crude up 0.4% to $84.09
• Bitcoin down 0.5% to $64,185

It was all about the Japanese yen during the session as the volatility swings pick up after the BOJ policy decision earlier today.

BOJ governor Ueda had his press conference but he did little to touch on the weaker yen and that was enough for traders to ramp USD/JPY higher. The pair moved up from 155.95 to 156.60 before a sudden surge higher in the yen brought the pair down to 155.00 right at the European open.

The timing of the move is largely suspect as it would be off-form for Tokyo to have intervened. The size of the move might have alluded to that at first but then the dip was quickly bought up. USD/JPY moved back up to 155.50-70 almost immediately, before regaining its composure to move to 156.80 now at the highs for the day.

Things are definitely heating up before the weekend with watchful eyes on any potential intervention from Tokyo, especially with it being a Japanese holiday on Monday. But I wouldn’t rule out a move then either if there isn’t anything today.

In other markets, stocks are staying underpinned after earnings beat from Alphabet and Microsoft. US futures are holding on to early gains for the most part while European indices are also posting modest gains so far on the day.

Coming up next, we have the US PCE price data to go through. That will offer traders more to work with after the Q1 GDP data yesterday. I shared some food for thought on that earlier here.

Have a great rest of the Friday and a wonderful weekend, everyone.

This article was written by Justin Low at www.forexlive.com.

SNB chairman, Thomas Jordan, says that they do take climate change very seriously but notes that:

„We should not give the impression that we can solve all the problems of the world with monetary policy.“

He also adds that the central bank takes into account all risks with its investments and that they do have exclusion criterias when making investment decisions. This of course is related to protests against the SNB, with environmental groups demanding for the Swiss central bank to offload investments in firms that are believed to be linked to global warming and climate change.

This article was written by Justin Low at www.forexlive.com.

Yesterday, the Nasdaq Composite opened lower
following a selloff caused by surprisingly high Core PCE data in the US Q1 GDP report. The market started to fade the move
right at the open and eventually finished the day almost unchanged. Today we conclude the week with the US PCE report and judging by yesterday’s
price action, we might see another rally at least until the new month data next
week changes the sentiment.

Nasdaq Composite Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the Nasdaq
Composite yesterday opened lower but eventually rallied all the way back to the
prior day’s lows. From a risk management perspective, the sellers will have a
much better risk to reward setup around the 15929 level where they will also
find the confluence of the
50% Fibonacci retracement level
and the red 21 moving average. The
buyers, on the other hand, will want to see the price breaking higher to
invalidate the bearish setup and increase the bullish bets into a new all-time
high.

Nasdaq Composite Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that
the price got rejected from the 21 moving average on this timeframe. Given
yesterday’s price action, we might see another push to the upside, right into
the 15929 resistance where
the sellers will look to pile in with a defined risk above the resistance to
position into new lows.

Nasdaq Composite Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see more
closely the yesterday’s negative gap which was filled soon after as the market
rallied for the entire trading session. Moreover, we should see a positive gap
today as tech earnings after the
close were much better than expected and some key stocks
like Alphabet surged into new highs.

This article was written by FL Contributors at www.forexlive.com.

If anything else, it shows that:

1) The drop earlier wasn’t likely any intervention check or otherwise from Tokyo. I mean, the timing of the move was already suspect as mentioned at the time. And that is arguably the giveaway now after the fact. It is definitely easier to digest and make sense of the move two hours later of course. So, what could it have been?

2) The pair is definitely in a rather abnormal state at the moment. Plenty of traders are staying sidelined in fears of being hammered down by Tokyo. As such, perhaps larger flows would lead to exacerbated price movements – at least more so than usual. That could’ve been it, alongside stops being triggered in such quick fashion.

3) The dip buying shows the underlying appetite in the market right now. It’s tough to fight the momentum especially with the BOJ conviction also lacking as of late. I mean, recent inflation data hasn’t been shaping up the way that they’re hoping it to be. And that is throwing a wrench in the works on any further rate hikes this year. That is not to mention that Japanese yen pairs are also underpinned by higher bond yields in recent weeks. Adding to that is the lack of technical resistance on the way up for USD/JPY currently.

In any case, we’re back to where we were a few hours ago now. Buyers might not get too carried away for now as we await the US PCE price data coming up. But barring any surprises, we could see price action start to pick up again after that. The 157.00 mark will be an interesting level to watch, as with any big round figures from hereon.

And as mentioned earlier here, it will be interesting to see if Tokyo has the appetite to act at the last minute today. Mind you, it is a Japanese holiday on Monday. But still, I wouldn’t rule out any action in the early morning then if there isn’t anything before the weekend later.

This article was written by Justin Low at www.forexlive.com.