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USDJPY Surges to 3-year high, Rumors Point to a Possible Raise in Rates by the BOE & Oil Prices Continue to Rise

Dollar surges to 3-year high against Yen

The Dollar rose to its highest level versus the Japanese Yen to start the week, as markets expected the Fed to press forward with easing its QE programme.

Despite the disappointing non-farm payrolls report on Friday, which saw 194,000 added to the U.S. economy, many expect tapering to begin next month.

Coach showed USDJPY Blasting through the Wedgeline in what is called a Throwover. Watch to see him explain how to trade it.

USDJPY rose to an intraday high of 113.41 in today’s trading session, which is its highest level since December 2018.

As the Dollar strengthened, Monday’s move also several U.S. indices lower, with the benchmark S&P 500 trading 0.21% lower in early afternoon trading.

Many now wait to see if the Fed will give any guidance to its potential next policy updates.

FTSE 100 higher on rate hike rumours

In the United Kingdom, the FTSE 100 finished higher on Monday, as it was also said that the BOE could be set to raise rates.

Over the weekend, Michael Saunders, a member of the Monetary Policy Committee, stated that speculators were right to expect the Bank to push forward plans to hike rates.

This comes as inflation within the world’s sixth largest economy continues to rise, led by recent moves in energy prices.

💡 How does monetary policy affect markets?
Monetary policy impacts the money supply in an economy, which influences interest rates and the inflation rate. It also impacts business expansion, net exports, employment, the cost of debt, and the relative cost of consumption versus saving—all of which directly or indirectly impact aggregate demand.

A survey by the Bank of America, also recently showed the consumer confidence within the UK had dropped to its lowest level in 8-months.

GBPUSD rose to an intraday high of 1.3673, its highest point since September 28th, before scaling back later in the session.

London’s FTSE 100 closed 0.72% lower.

Oil prices rise to highest since 2014

Oil prices continued to climb to begin this week, with prices of Crude once again setting multi-year highs.

The move comes as the supply of energies remains disrupted, as producers continue to overcome bottlenecks in the distribution process.

WTI Crude hit a high of $82.20 earlier today, a level it had not reached since October 2014.

💡 How high can oil prices get?
A week ago, Goldman, which had a price forecast of $80 a barrel oil for the last quarter of 2021, believed that the natural gas crunch combined with a colder-than-usual winter in Europe and Asia could pose an upside risk of $5 a barrel to its Q4 price projection.

“While we have long held a bullish oil view, the current global supply-demand deficit is larger than we expected, with the recovery in global demand from the Delta impact even faster than our above-consensus forecast and with global supply remaining short of our below consensus forecasts,” Goldman analysts wrote in a note dated Sunday and carried by Reuters.

Many believe prices could go to as high as $100 per barrel, as the Organization of the Petroleum Exporting Countries and allies, or OPEC+ continue to maintain output curbs.

Brent also traded at a 7-year high, hitting $85.01 per barrel.

“You never know what kind of setup [the] market will present to you; your objective should be to find [an] opportunity where risk-reward ratio is best.”

– Jaymin Shah

Eliman Dambell

Senior Market Analyst