Trader Insights

Markets That Matter – 2022 September – Newsletter

As the northern hemisphere summer draws to a close, Europe now nervously awaits what many are suggesting will be a long, hard winter. Economists are forecasting a deep recession in the Eurozone area, driven largely by rising energy costs and slowing demand. As well, inflation is still rife and doesn’t appear to be slowing, in fact, some forecasts have the UK y/y figures at 22% in Q1 2023 (currently 9.9%).

This, as central banks continue to raise rates at the fastest rate in decades, with even the ECB getting in on the act, is providing a cocktail of ‘bad news’ for equity markets and risk assets in general. The USD has been the ‘best of a bad bunch’ in G10 FX as the Cable dropped to new 37-year lows. Let’s dive in and discuss some of the main movers, as well as what you need to be paying close attention to from here.

The Dollar Yen

A market that has recently looked like an unstoppable force to the upside. Shorting it has been like trying to stand in front of a steam train to slow it down. Breaking multi-year high after high with ease, but has it finally met its match at 145? There has been talking of potential MoF intervention to stem the weakness in the Yen and this level looks quite significant for that. Though, a run into the 1997 high at 150 still looks a favourable momentum bet, should policy divergence remain on current tracks.

Monthly Newsletter Sep 2022 2

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