The Japanese Yen dropped firmly after two dovish academics were nominated to the nine-member Board of the Bank of Japan
- The main market story over today's Asian session was the rise in the AUD/JPY currency pair which has two components, one on each side:
- Two dovish academics (Asada and Sato) were nominated to the Bank of Japan's Board which decides on its interest rate. Both are known to generally favour lower rates. This saw the Yen fall against almost every currency over recent hours.
- Australian CPI (inflation) data came in a higher than expected, with month-on-month inflation increasing at a rate of 0.4% compared to the anticipated 0.2%, keeping the annualised rate of 3.8%. This has slightly increased the prospect of rate hikes, which has boosted the Aussie.
- President Trump earlier finished giving his "State of the Union" address. Notable highlights which are likely to affect the markets were:
- Upbeat take on the US economy and growth.
- Pledged a new 15% global tariff imposed under Section 122 of the Trade Act.
- Pledged to use force to prevent Iran obtaining a nuclear weapon if necessary, calling it the world's leading state sponsor of terrorism. He also mentioned their ballistic missile program, noting that it can already reach Europe, and could eventually expand range to reach the continental United States if left unchecked.
- WTI Crude Oil is starting to look more bearish as it threatens to complete a bearish head and shoulders chart pattern, with a pivotal neckline at about $65.50. A drop below that level could see a further fall, but the price remains vulnerable to a sudden increase on war rumours or developments. Polymarket currently shows a market which expects a US attack on Iran at some point over the next three weekends.
- US stock markets recovered yesterday, but the major indices are still well off their highs.
- Precious metals are starting to gain again in recent house, led higher by Silver, which is trading above $90 per ounce for the first time since the precious metals crash at the start of this calendar month. Gold is also gaining.
- Bitcoin continues to look vulnerable as it trades below the key resistance level at $66,435. A break below the long-term low support at $61,229 which would probably be extremely decisive. If the price breaks below that and holds, Bitcoin could easily see a much stronger drop to $50,000 or even lower as the crypto bubble continues to deflate.
- In the Forex market, the strongest major currency since today's Tokyo open has been the Australian Dollar, while the weakest has been the Japanese Yen, putting the risk barometer currency cross AUD/JPY in focus. The Forex market may be tricky to navigate this week with potential twists and turns in the US tariff story.
- There are no further high-impact economic data releases due today.