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Chart of the day - USDJPY (20.11.2023)

Today, the Japanese yen is decidedly the strongest G10 currency, recording a 0.80% increase against the USD. The declines in the pair come after USDJPY once again tested this year's and historical highs around 151.800. However, the bulls were unable to break through this level, and the current declines are a culmination of a weakening dollar and a strengthening yen.

The Japanese yen is somewhat rebounding but still remains the worst-performing G10 currency, losing over 13%. The current weakness of the JPY has begun to attract the attention of foreign investors, including Pacific Investment Management Co. (Pimco). Pimco bets that the Bank of Japan (BoJ) will tighten monetary policy in response to rising inflation. A report prepared by Bloomberg indicates that hedge funds have been accumulating the Japanese currency since it weakened above 140 JPY per USD. With the decline in inflation in the USA and persistently high inflation in Japan, Pimco sees a potential change in Japanese monetary policy, including abandoning the yield curve control policy and potential interest rate hikes. Similarly, former Fed Vice Chairman and now a director at Pimco, Richard Clarida, suggests that the BoJ may abandon yield curve control by the end of the year.

Source: xStation 5

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