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Dust Settles


Rupiah Tracks Fluctuations In Risk Sentiment


Yuan Firms, Sino-Taiwanese Tensions Simmer

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  • In the past few months, we have seen that the deceleration in Chinese economic activity combined with the sharp contraction in liquidity (China TSF) have been weighing both on domestic and international prices such as copper.
  • However, the recent JPY depreciation has been supporting the industrial metal, with copper prices breaking above its LT downward trending resistance line last week to trade a multi-month high this week.
  • Surging energy prices in addition to rising LT Treasury yields have been both impacting the Japanese yen recently, which has been weakening against all the major crosses in the past two weeks.
  • The chart below shows that ST JPY weakness generally tends to support risky assets, and therefore the direction of copper prices in the short term will strongly depend on the JPY dynamics.

Source: Bloomberg/MNI