Political Instability in France and South Korea and USD/JPY’s Stable Movement
Market Overview
This week, political unrest in France and South Korea is affecting the markets.
France
- A vote of no confidence against the Barnier administration is expected today.
- Political instability in France continues, putting downward pressure on the Euro.
South Korea
- President Yoon initially declared martial law but retracted it hours later.
- Impeachment proceedings are being discussed in parliament, making the outlook uncertain.
- Risk aversion was observed briefly in the Asian market, but European stocks and the Nikkei remain relatively stable.
USD/JPY
- USD/JPY bounced back from the mid-149 yen level to reclaim the 150 yen range.
- Expectations that the BOJ will delay an early rate hike are supporting yen selling.
- Overall, the market is not overreacting to political risks, maintaining a relatively calm tone.
Key Events and Economic Indicators
Economic Indicators
- Non-Manufacturing PMI (November): To be released for France, Germany, the Eurozone, the UK, and the US.
- US ISM Non-Manufacturing PMI Forecast: 53.5 (Previous: 54.1).
- US ADP Employment (November): Forecast: +150k (Previous: +233k).
- Eurozone PPI (October): Expected to show a year-on-year decline.
Speeches
- Major central bank leaders, including Fed Chair Powell, ECB President Lagarde, and BoE Governor Bailey, are scheduled to speak.
- The Fed’s Beige Book will be released.
Other Developments
- Trump Tariff Issues: Ongoing market impact from his comments on a 100% tariff on BRICS nations.
- OECD World Economic Outlook: May influence market sentiment.
Trading Strategies
USD/JPY
- Expectations of a delayed BOJ rate hike are supporting yen selling.
- Watch for a potential strengthening of the dollar if ISM Non-Manufacturing PMI surprises positively.
- Strategy: Focus on buying dips around the lower 150 yen range.
EUR/USD
- Multiple risk factors, including France’s political unrest, Trump’s tariff comments, and tensions with Russia.
- Strategy: Sell on rallies, targeting resistance near 1.05.
GBP/JPY
- Political risks in South Korea and France contribute to a bearish outlook for the pound.
- Strategy: Aim for a break below 190 yen.
Gold (XAU/USD)
- Increased political risk aversion could drive renewed buying interest in gold.
- Strategy: Target buying opportunities with a goal of $2,660.
Conclusion
Focus on the US ISM Non-Manufacturing PMI and ADP Employment Data as today’s key events. Until then, the market remains susceptible to political and risk-related news but is generally stable. Maintain a calm trading approach, and keep an eye on selling opportunities for the euro.
