Yen Descends, Inflation Up Next

  


by Adam Button

weakness continues to steal the show, we take a look at why.  All currencies are stronger vs the USD except for JPY, which resumes its fall as soars and even as yields pause. US November is due up next, with headline seen +5.3% and at 4.0%.

Mystery Chart

Yen weakness continues with multiple crosses breaking key levels. USD/JPY continued to fresh three-year highs, sustaining the bid even as stocks slipped and yields fell 6 bps.

It’s clear that rising global yields and yen crosses move in tandem but a better question is why both are climbing. That two main drivers are rising inflation worries and ongoing supply bottlenecks, which are feeding back into each other. Add in the ongoing energy price shock and there’s a strong case for the reflation trade.

See also  Yen Under Pressure As Nonfarm Payrolls Loom

One unheralded factor is that covid appears to be subsiding globally. Another wave of the virus was baked into global growth projections but optimism is rising that we’ve seen the final thrust – at least outside of China and the antipodeans which remain at high risk due to limited natural immunity.

Whatever the driver, the charts of yen crosses are increasingly convincing. on Monday rose to the highest in three years and is now threatening the 2018 high.

Looking ahead, the US CPI report is due out at 1230 GMT and expected to show year-over-year remaining at +5.3% with core remaining at +4.0%. If you recall back to last month, core inflation undershot expectations and it briefly weighed on the . That victory lap for team transitory didn’t last long though as the dollar quickly resumed its climb.

See also  Pressure On Markets Returns as Yen Sells off
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

See also  GBPJPY next week path





Read more here