JPY Craters, Stocks Recover
20 April 2022
Tuesday's session started slowly but turned into another selling day for the Japanese currency, while US investors jumped into equities amid an optimistic earnings season outlook.
On Wednesday, that trend continued. So far, the Japanese yen is the worst performing currency out of the majors, being down 6% against the USD since April and falling to the lowest level (the highest level for the USDJPY pair) since May 2002.
Since BoJ Governor Haruhiko Kuroda earlier in the week suggested that the Japan central bank won’t be looking to change its policy stance any time soon, we might see the 130 level in the USDJPY pair pretty soon.
As already mentioned, US stock indices jumped yesterday, despite another leg higher in US yields, pushing the Nasdaq 100 index back above the 14,000 USD level. Likewise, the SP500 index returned above 4,400 USD, and the Dow rose toward 35,000 USD.
Investors will pay attention to today's industrial production and trade balance figures from the eurozone, possibly moving the EURUSD pair.
Canadian CPI data are due during the US session, likely causing volatility in the USDCAD pair as the yearly inflation is expected to climb again. However, the US calendar will offer only existing home sales and the Fed's Beige Book, usually not market-moving events.
In commodities, gold and silver fell sharply on Tuesday, probably due to the rising US yields as real yields pushed to new cycle highs, usually a negative sign for precious metals. Oil also dipped, but the WTI benchmark remained above 100 USD.