TechnoMeter

Another week of heightened volatility in global bond and equity markets proved to be fertile ground for another round of gains by the Japanese Yen. Spurred on by fresh concerns over the Brexit process and the Italian budget saga, GBP/JPY and EUR/JPY were two of the three worst performers, losing -2.45% and -1.53% respectively. More pressure on emerging markets amid trade war concerns weighed on AUD/JPY and NZD/JPY, which sank by -0.97% and -1.96% each.



While price action on Friday produced a sharp reversal in higher yielding currencies and risk-correlated assets, thus yielding a selloff in the Yen, the facts on the ground dictating the current risk environment haven't changed: the aggregate impact of tightening monetary policy, mismanaged fiscal policy (rising deficits), trade wars, high oil costs, and high inflation are too much for market participants at present time. Weekly and monthly charts still point to further gains for the Japanese Yen, even if a round of short-term position squaring (profit taking at the end of the month) transpires.

more...