Forex Top Team

Withdrawal of the UK’s large-scale tax cuts will restore risk tolerance, how long will the good mood continue?

In recent years, there have been many cases of bad news coming out and then recovering. A good example of this is the 2016 referendum in the UK to leave the EU. And recently, the Truss administration, which launched a large-scale tax cut without financial resources, has become a hot topic. Yesterday, UK Finance Minister Hunt announced that he would withdraw the proposed tax cuts, and he seems to be taking a breather. However, as Prime Minister Truss admits to failing, the stumbling block at the time of the inauguration of the administration was significant. Calls for his resignation have surged from within the Conservative Party this week, putting Truss in his biggest crisis yet. The fact that the UK’s financial crisis was averted yesterday led to higher stock prices and a strong pound, creating a favorable mood in the overall market. How long will this continue? I would like to continue to pay attention to British-related news reports.

The dollar/yen has hit the 149 yen level over the past day or two. When yen-buying intervention was implemented on September 22, the exchange rate fell sharply to the ¥140 level. However, in less than a month since then, the yen has depreciated and the dollar has strengthened to the level of 150 yen. Although the daily fluctuations are not as turbulent as the September market, the one-month rise is almost comparable to the one-month period before the previous intervention. It is speculated that the government and the Bank of Japan will be paying close attention to how the pair breaks out of the 150-yen mark.

 

Based on the price movements, it seems that Japan’s foreign exchange intervention took place about two hours ago today. Probably, it is assumed that he came to stop the rise here, being conscious of the 150 yen level. Considering whether the top price will be suppressed again today, the USDJPY sell entry was made earlier. However, if there is no movement, the position will be cut.