Markets are betting against the British pound on fears that the new UK government will lose credibility over its economic projections, as happened with the Truss government in 2022.
- The British pound is trading strongly lower, hitting a new one-year low a few hours ago, as options markets make strong bets against the British pound on concerns that the new British government’s economic policy projections will fail to materialize, much like they did in 2022. .during the brief Premiership of Liz Truss. This is a fundamental and sentimental factor working against the British pound that forex traders could rely on for a medium to long-term short trade against the British pound, especially against the strong US dollar, putting the GBP/USD currency pair in focus.
- The Australian dollar loses value after the release of lower-than-expected Australian retail sales data. Yesterday’s higher-than-expected Australian consumer price index (inflation) data also helped weaken the Aussie.
- Yesterday’s release of the minutes of the FOMC meeting produced no real surprises, with the notable takeaway being the caution of several members about lowering inflation to the 2% target rate.
- Global stock markets were mostly trading lower during the past day.
- The USD/JPY currency pair rallied again over the past day to trade at a fresh 5-month high before giving up some of its gains. This was partly due to the remaining strength of the USD supported by a long-term bullish trend, but the immediate cause was more the continued weakness of the Japanese Yen. The yen’s weakness is clearly troubling the Bank of Japan, which is unable to meet a long-awaited second-tier hike due to continued weak wage growth. The bank has warned of a weakening yen, but it may not be able to do much, as has also been the case in recent years, so trend and momentum traders will likely have good reason to be long with the currency pair.
- On the Forex market, as of today’s opening in Tokyo, the strongest currency was the Japanese yen, while the weakest currency was the Australian dollar. The US dollar is in a strong bullish trend and traded at a new two-year high last week. The EUR/USD currency pair and the USD/JPY currency pair remain within the valid long-term trends, with EUR/USD bearish in the last few hours.
- The US 10-year Treasury yield is near a multi-month high and will attract the interest of trend traders to the long side. Some CFD brokers offer this to traders and micro futures are available on CME.
- No high-impact data releases are scheduled for today.
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