Rise in US Yields Dragging Yen Pairs with It US 10 Year Yields EURJPY GBPJPY
Rise in US Yields Dragging Yen Pairs with It: US 10-Year Yields, EUR/JPY, GBP/JPY
Over the long-term, Yen and US bonds are positively correlated to each other. When bonds go down, interest rates go up. So, USD/JPY and interest rates are also positively correlated. This year, that relationship did not always hold as USD/JPY was more in correlation with the US Dollar than interest rates. However, since mid-November, the lower Yen/higher interest rates relationship has come back into favor.
US 10-Year Yields
Source: Tradingview, City Index
US 10-year yields have been moving in an upward sloping channel since August 5th from 0.504% to a high of 0.982% on November 11th. In doing so, yields had a false breakout about the previous highs of 0.954% on June 5th, only to move back within the channel. Today, rates are near 0.923% and closing in once again on the elusive 1.00%. Notice the correlation coefficient on the bottom of the chart and that since November 9th, the positive correlation between US 10-year yields has returned. Today, the positive correlation is +.77. (A correlation of +1.00 means that USD/JPY and US 10-year yields are moving together 100% of the time. ) On a 60-minute timeframe, today yields broke out of a triangle pattern and retraced 61.8% of the move from the November 11th high to the November 20th low.
Source: Tradingview, City Index
EUR/JPY
On a daily timeframe, EUR/JPY has broken out above November 9th highs at 125.13. Next resistance is a confluence from the September 1st highs and a downward sloping trendline from the highs of December 2014, near 127.00.
Source: Tradingview, City Index
GBP/JPY
Check out GBP/JPY on a 240-minute timeframe as it tries to break above the November 11th highs near 104.21. Horizontal support is just below at 139.84, then the upward sloping trendline from the lows of October 30th near 139.00.
Source: Tradingview, City Index
Many of the other Yen pairs look similar to these. If US bonds continue to move lower and yields move higher, than we can expect the Yen to move lower as well (or XXX/JPY to move higher!).
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
StoneX Financial Pte. Ltd. is not under any obligation to update this report.
Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.cityindex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.
ALL TRADING INVOLVES RISKS. LOSSES CAN EXCEED DEPOSITS.
City Index is a trading name of StoneX Financial Pte. Ltd. (“SFP”) for the offering of dealing services in Contracts for Differences (“CFD”). SFP holds a Capital Markets Services Licence issued by the Monetary Authority of Singapore for Dealing in Exchange-Traded Derivatives Contracts, Over-the-Counter Derivatives Contracts, and Spot Foreign Exchange Contracts for the Purposes of Leveraged Foreign Exchange Trading. SFP is also both Derivatives Trading and Clearing member of the Singapore Exchange (“SGX”). SFP is a wholly-owned subsidiary of StoneX Group Inc.
The information provided herein is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to invest, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk.
The information does not represent an offer of, or solicitation for, a transaction in any investment product. Any views and opinions expressed may be changed without an update. To understand the risks and costs involved, please visit the section captioned “Important Information” and the “Risk Disclosure Statement”.
The information herein is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.
StoneX Financial Pte. Ltd. 1 Raffles Place, #18-61, One Raffles Place Tower 2, Singapore 048616. Tel: 6309 1000. Co. Reg. No.: 201130598R.
This advertisement has not been reviewed by the Monetary Authority of Singapore.
© City Index 2024