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FOREX: Japanese Yen Recovers Well Amid Turnaround for US Yields

FOREX
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  • In the penultimate trading session before the Fed’s final decision of the year, US Treasuries have seen solid two-way price action. The US 10-year yield rose as high as 4.44% before retreating back to 4.38% and in sympathy, USDJPY has seen a roughly 100 pip pullback from intra-day highs to 153.35 as we approach the APAC crossover.
  • GBP is in favour Tuesday, as wages data released pre-market came in ahead of expectations and showed early signs of a reversal in momentum for private wages - posing problems for any MPC members that may have looked to vote for a rate cut at this week's BoE decision. As a result, markets further trimmed rate cut bets across 2025.
  • GBPUSD (+0.25%) has risen back above the 1.27 handle and key resistance to monitor is 1.2811, the Dec 6 high. EURGBP finds itself closer to cycle lows, trading around 0.8250 at typing, ahead of the major support at 0.8203, the Mar 7 ‘22 low and the lowest point of a multi-year range.
  • Softer equities have weighed on the likes of AUD, NZD and CAD, all falling around half a percent. The Euro relatively outperforms and continues to oscillate around the 1.05 mark.
  • In emerging markets, the Brazilian Real saw sharp volatility and the central bank had to intervene on two separate occasions to curb the declines. USDBRL rose to a record high of 6.2080, before the BCB used their most forceful intervention yet to stabilise the Real back to 6.10 per dollar.
  • UK inflation data headlines the Wednesday data calendar before the focus turns to the December FOMC decision.
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  • In the penultimate trading session before the Fed’s final decision of the year, US Treasuries have seen solid two-way price action. The US 10-year yield rose as high as 4.44% before retreating back to 4.38% and in sympathy, USDJPY has seen a roughly 100 pip pullback from intra-day highs to 153.35 as we approach the APAC crossover.
  • GBP is in favour Tuesday, as wages data released pre-market came in ahead of expectations and showed early signs of a reversal in momentum for private wages - posing problems for any MPC members that may have looked to vote for a rate cut at this week's BoE decision. As a result, markets further trimmed rate cut bets across 2025.
  • GBPUSD (+0.25%) has risen back above the 1.27 handle and key resistance to monitor is 1.2811, the Dec 6 high. EURGBP finds itself closer to cycle lows, trading around 0.8250 at typing, ahead of the major support at 0.8203, the Mar 7 ‘22 low and the lowest point of a multi-year range.
  • Softer equities have weighed on the likes of AUD, NZD and CAD, all falling around half a percent. The Euro relatively outperforms and continues to oscillate around the 1.05 mark.
  • In emerging markets, the Brazilian Real saw sharp volatility and the central bank had to intervene on two separate occasions to curb the declines. USDBRL rose to a record high of 6.2080, before the BCB used their most forceful intervention yet to stabilise the Real back to 6.10 per dollar.
  • UK inflation data headlines the Wednesday data calendar before the focus turns to the December FOMC decision.