Strengthening of the Japanese Yen. Market review from Fort Financial Services

The beginning of the month was positively met today on the global markets with the strengthened Asia and growing Europe. European markets were growing, on average, by 1.5% at the beginning of today’s session. American futures have added approximately one per cent and the currency pair JPY/USD was traded at around 120- on the mid level of the ongoing consolidation. The carry-trade strategy of the Japanese yen was in the “game” again based on the growing share markets. The mood was spoiled by the world's news agencies, and more specifically by the Bank of Japan which released the statement that in the current environment the regulator does not see the need for the immediate support for markets’ expansion and incentive programs. The bank prefers to wait for the release of enough statistical data so that it can decide on further stimulating programs.
The market reacted with an immediate strengthening of the Japanese currency by 20 points. The pair dropped from 120 to 119.75. With the ECB hints spoken last week against the extension of incentive measures in the near future, all hopes were put to the Bank of Japan and its October assembly. Robots and algorithms are set to work on the news background, a kind of an instant responded to sell the dollar against the yen. This in turn caused a rollback of futures on US markets, which showed vigorous dynamics throughout the day anticipating a strong opening of US stock exchanges. After the events in the USDJPY American futures have dropped and futures on the broad index of SP 500 are traded with an only 0.10% increase. (1975) The German DAX also moved from growth to fall and is now losing 0.47%. We have already said that there are no enough reasons for the market reversal and correction completion – is a matter of time. Is it so or not we will find out soon.
Earlier, the world’s emerging markets were growing based on the increasing oil price and the correcting price of commodity markets. The data for China showed that the manufacturing activity in China continued to fall in September however, the figures were better than the August ones. The index of the emerging MSCI markets was traded positively by 1.70% today. Asian markets were positively traded growing by approximately 1.5%. Chinese markets are closed for a long weekend. Yesterday, the global markets completed another highly volatile month. If some markets still managed to get in a little plus for the month, the global markets lost an average of 7-10 percent during the past three months.
Euro is still traded on the set levels. The breakthrough of 1.1190 gave the possibility to the pair to start testing the level 1.1145. Before the release of the data regarding the US unemployment euro will remain restricted in its moves and within the set range. The euro reaction to tomorrow’s news, in our opinion, will be very volatile.
Oil futures continue to strengthen, crude oil Brent is traded at the level $48.85, slightly away from the maximums of the trading day; the American WTI rose by 1.53$ and is now at the level $45.78.
Futures on gold continue to drop since the last week’s 1112. Now the metal is traded in the area of the two-week minimum (1100). Gold is under pressure due to the rising US dollar. If tomorrow the market observes strong numbers then it will become another negative signal for the metal’s quotations.
The review is prepared by the analytical department of Fort Financial Services.
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