It’s all about the Fed

USD/JPY => The index rises towards 144.00

Ford => The stock tumbles 11%

BTC/USD => The cryptocurrency falls below 19k

USD/JPY rises on widening Fed-BoJ divergence expectations

USD/JPY gained 0.3% yesterday as the pair continues to edge northwards. USD/JPY is on its sixth straight week of gains as the market prepares for central bank divergence to widen. The Fed is expected to announce another 75 basis point hike today, its third consecutive jumbo-sized hike, although high inflation risk means that a 100 basis point hike is also possible, albeit less likely. The market will be focusing on what the Fed’s new quarterly projections and whether the Fed turns more hawkish for the outlook towards the coming meetings, which could lift the USD higher. Meanwhile, the BoJ will announce the interest rate decision tomorrow and is expected to stick with its dovish stance.   

Where next for USD/JPY?

The USD/JPY is edging higher, with a bullish bias towards the 145.00 psychological level and 24-year high, which it needs to break above to extend the bullish run towards 146.50, the rising trendline resistance. On the flip side, support can be seen around 142.50 and 141.40 at the 20 sma. 

Ford fell 11% yesterday. Here’s why.

Ford’s share price tumbled 11% yesterday after the automaker warned over inflationary cost pressures and supply chain issues. Ford said that inflation-related costs were expected to be around $1 billion more than in the current quarter and also advised that a shortage in some parts had delayed deliveries of about 40,000-45,000 cars. Industry peer General Motors warned of similar supply chain disruptions in July. It appears that the industry, chip, and component shortages are recovering at a slower pace than forecast. The warning from Ford comes less than a week after a warning from bellwether FedEx saw it withdraw guidance given high economic uncertainty and the slowing economic outlook.

BTC/USD trades sub 19k ahead of the Fed

Cryptocurrencies fell on Tuesday, pulling Bitcoin lower in line with US stocks. This week, risk aversion has dominated trade as investors await the critical FOMC rate decision. BTC/USD fell to a low of 18,273, its lowest level since June. ETH/USD also slid 2% to 1330. Cryptos, which have been tracking tocks all year, dropped in line with US stocks yesterday. The 60-day correlation coefficient between Bitcoin and the S&P 500 rose to 0.7, which is just shy of the My record, keeping in mind that a coefficient of 1 means they move in perfect tandem. Risk assets across the board have come under pressure in recent weeks on fears that the Fed will act more aggressively. Higher interest rates would take liquidity out of the crypto market. All eyes are on the Fed, so much so that MicroStrategy Inc’s announcement that it purchases around $6 million bitcoin was as good as shrugged off.

Support can be found at 18,300 (weekly low) and 17600 (2022 low).

Resistance for the pair can be seen at 20k (round number) and 21500 (50 sma).

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