Caution over risk-off yen buying trends
21.01.2022
- Remarks by a Member of the Bank of England’s Monetary Policy Committee
- U.S. Leading Economic Index
Yesterday, the three major U.S. stock indices all extended their losses toward the close, creating a risk-off sentiment characterized by falling stock prices, lower interest rates, and declining crude oil prices. The VIX (fear index) rose by about 7% from the previous day to 25.5, largely reflecting the impact of the stock market decline. However, the Philadelphia Fed Business Outlook Index released yesterday came in at 23.2, beating the market forecast of 19.0.
In today’s Asian trading session, the yen has emerged as the strongest currency in the foreign exchange market, with GBP/JPY falling more than 130 pips from 156.04 to 154.70. From a technical perspective, GBP/JPY has broken well below the 20-day moving average on the daily chart and is in a downtrend, with a double top beginning to form. If the yen-buying trend continues, we should keep an eye on the possibility of the pair breaking below the 150-yen psychological level.
Today’s schedule includes UK retail sales and the Turkish consumer confidence index at 4:00 PM European time, remarks by ECB President Lagarde at 9:30 PM, remarks by a member of the Bank of England’s Monetary Policy Committee at 10:00 PM US time, Canadian retail sales at 10:30 PM, and the US Leading Economic Index at midnight. We’ll be closely monitoring the situation to see if the foreign exchange market experiences significant volatility heading into the weekend.
Author: Keisuke Sakurai
