In this video: Chief Market Strategist Gareth Soloway deep dives into the charts, alerting investors that the 10 year yield is breaking out of a bull flag. He discusses how the Japanese 10 year yield continues to soar and the bond vigilantes are about to smack markets lower. This is major for investors as it could trigger as much as a 20% correction in asset prices.
Gareth uses technical analysis on the S&P 500, Dow Jones Industrial Average and Russell 2000 to give investors a trigger for the bigger market collapse. He also analyzes the chart of the DXY, USD/JPY, USD/CAD, GBP/USD, EUR/USD and more. These currencies are all signaling major trouble ahead as the U.S. Dollar is nearing a major multi-decade breakdown. Video by Gareth Soloway.
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Current currency trends are showing signs of volatility, particularly with the Japanese yen sliding to multi-year lows against the US dollar and general market sensitivity to US interest rate expectations. This reflects broader concerns about global liquidity conditions and potential economic realignment, which can impact trade, inflation, and investment flows.
Key Insights
-Dollar Funding Pressure: When the global system urgently needs US dollars, it creates stress signals in short-term funding, which can drive sharp, one-sided moves in various currency pairs, especially in emerging markets.
-US Rate Cut Expectations: Weakening US economic data is leading markets to anticipate earlier interest rate cuts by the Federal Reserve, which challenges the dollar's long-term uptrend and increases volatility in major currency pairs.
-Yen Weakness: The Japanese yen recently fell to its lowest level against the dollar since July 2024, prompting Japan's finance minister to express concern to US officials. This trend is influenced by expectations for potential snap elections and differing interest rate policies.
-Impact on Business: High currency volatility affects businesses with international operations by creating transactional risks, impacting profitability, and complicating financial planning, though savvy firms can use hedging to mitigate these risks.
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