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Home ANALYSIS

USDJPY moves to a new high as Waller speaks

A.R Chowdhury by A.R Chowdhury
March 18, 2022
Reading Time: 7 mins read
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USDJPY moves to a new high as Waller speaks

USDJPY

USDJPY moves to new highs

The  USDJPY 
USD/JPY

The USD/JPY is the currency pair encompassing the dollar of the United States of America (symbol $, code USD), and the Japanese yen of Japan (symbol ¥, code JPY). The pair’s rate indicates how many Japanese yen are needed in order to purchase one US dollar. For example, when the USD/JPY is trading at 100.00, it means 1 US dollar is equivalent to 100 Japanese yen.  The US dollar (USD) is the world’s most traded currency, whilst the Japanese yen is the world’s third most traded currency, resulting in an extremely liquid pair, and very tight spreads, often staying within the 0 pip to 2 pip spread range on most forex brokers. Although the range of the USD/JPY isn’t traditionally particularly high, the lack of large price action often associated with other JPY pairs does make it easier to trade.This is especially true for short-term traders, although without offering a great pip potential. Even though the USD/JPY is the world’s second most traded pair, it’s not as popular as one might think with regards to retail traders.The pair carries a reputation as “boring”, although this isn’t an entirely accurate reflection. Trading the USD/JPYThe JPY is highly regarded as a safe haven currency, with investors often increasing their exposure following periods of uncertainty or market-induced fallouts.As both the US and Japan are highly developed economies, there are several key factors affecting the value of either currencies. This includes a range of economic indicators such as gross domestic product (GDP) growth, inflation, interest rates and unemployment data. Monetary policy by the US Federal Reserve and Bank of Japan are also large determinants in the value of each currency.

The USD/JPY is the currency pair encompassing the dollar of the United States of America (symbol $, code USD), and the Japanese yen of Japan (symbol ¥, code JPY). The pair’s rate indicates how many Japanese yen are needed in order to purchase one US dollar. For example, when the USD/JPY is trading at 100.00, it means 1 US dollar is equivalent to 100 Japanese yen.  The US dollar (USD) is the world’s most traded currency, whilst the Japanese yen is the world’s third most traded currency, resulting in an extremely liquid pair, and very tight spreads, often staying within the 0 pip to 2 pip spread range on most forex brokers. Although the range of the USD/JPY isn’t traditionally particularly high, the lack of large price action often associated with other JPY pairs does make it easier to trade.This is especially true for short-term traders, although without offering a great pip potential. Even though the USD/JPY is the world’s second most traded pair, it’s not as popular as one might think with regards to retail traders.The pair carries a reputation as “boring”, although this isn’t an entirely accurate reflection. Trading the USD/JPYThe JPY is highly regarded as a safe haven currency, with investors often increasing their exposure following periods of uncertainty or market-induced fallouts.As both the US and Japan are highly developed economies, there are several key factors affecting the value of either currencies. This includes a range of economic indicators such as gross domestic product (GDP) growth, inflation, interest rates and unemployment data. Monetary policy by the US Federal Reserve and Bank of Japan are also large determinants in the value of each currency.
Read this Term
has moved to a new session/week/6 year high as Fed’s Waller expresses the need to go 50 bps, joining Fed’s Bullard. He also sees rates near or above neutral by the end of the year.

The high from earlier this week reached 119.116. The high price just reached 119.246.

Yesterday, the price had a lower high for the first time in 7 trading days, and the pair temporarily moved below the high from Tuesday and early Wednesday near 118.44, but could not sustain downside momentum. The low today in the early Asian session stalled just ahead of that level at 118.466. The price also remains above the rising 100 hour MA at 118.42.

Looking at the weekly chart, the price moved above the end of 2016/early 2017 highs between 118.60 to 118.65 this week. That took the price to the highest level since the end of January in 2016 (6+ years).

USDJPY

USDJPY moves above end of 2016/early 2017 highs

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The 2 year  yield 
Yield

A yield represents the earnings generated by an investment or security over a certain time period. Yields are typically displayed in percentage terms and are in the form of interest or dividends received from it.These figures do not include the price variations, which separates it from the total return. Consequently, a yield applies to various stated rates of return on stocks, fixed income instruments such as bonds, and other types of investment products.Yields can be calculated as a ratio or as an internal rate of return, which may also be used to indicate the owner’s total return, or portion of income.Why Do Yields Matter?At any point in time, all financial instruments compete with each other in a public marketplace. Analyzing yields is one among many metrics used by analysts and investors and reflects a singular part of the total return of holding a security. For example, a higher yield allows the owner to recoup his investment sooner, and thus mitigates risk. By extension, a high yield may have resulted from a falling market value for the security as a result of higher risk. Yield levels are also influenced by expectations of inflation. Fears of higher levels of inflation in the future suggest that investors would ask for high yield or a lower price versus the coupon today.The maturity of the instrument is also one of the elements that determines risk. The relationship between yields and the maturity of instruments of similar credit worthiness, is described by the yield curve. Instruments over longer intervals commonly have a higher yield than short dated instruments.The yield of a debt instrument is typically linked to the credit worthiness and default probability of the issuer. The more the default risk, the higher the yield would be in most of the cases since issuers need to offer investors some compensation for the risk.

A yield represents the earnings generated by an investment or security over a certain time period. Yields are typically displayed in percentage terms and are in the form of interest or dividends received from it.These figures do not include the price variations, which separates it from the total return. Consequently, a yield applies to various stated rates of return on stocks, fixed income instruments such as bonds, and other types of investment products.Yields can be calculated as a ratio or as an internal rate of return, which may also be used to indicate the owner’s total return, or portion of income.Why Do Yields Matter?At any point in time, all financial instruments compete with each other in a public marketplace. Analyzing yields is one among many metrics used by analysts and investors and reflects a singular part of the total return of holding a security. For example, a higher yield allows the owner to recoup his investment sooner, and thus mitigates risk. By extension, a high yield may have resulted from a falling market value for the security as a result of higher risk. Yield levels are also influenced by expectations of inflation. Fears of higher levels of inflation in the future suggest that investors would ask for high yield or a lower price versus the coupon today.The maturity of the instrument is also one of the elements that determines risk. The relationship between yields and the maturity of instruments of similar credit worthiness, is described by the yield curve. Instruments over longer intervals commonly have a higher yield than short dated instruments.The yield of a debt instrument is typically linked to the credit worthiness and default probability of the issuer. The more the default risk, the higher the yield would be in most of the cases since issuers need to offer investors some compensation for the risk.
Read this Term
is at 1.950%. It is up from 1.903% at the start of the NY session. The 2-10 year spread is around 21 basis points.

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A.R Chowdhury

A.R Chowdhury

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