Yesterday, on November 4th, investors probably abstained from purchasing US dollars and dollar-denominated assets in order to analyze the abnormal situation in the markets of crude oil, USD and US stocks. At the same time, traders and investors are looking forward to the forthcoming ECB meeting scheduled for Thursday, November 6th, as well as the US employment report scheduled for Friday, November 7th. This is definitely needed to define the near-term prospects of multiple financial assets.
At the same time, Nikkei reports that the Japanese GDP is likely to drop in September due to weak consumer spending and investing in core goods. With that said, the current strengthening of the US Dollar against the Japanese yen may well be projected into the near future thanks to the weakness of the Japanese economy coupled with a strong US economy.
In particular, Nikkei assumes that Japan may actually see its GDP dropping by 0,3% in September versus August. The supposition is backed by the preliminary economic research published on Tuesday, November 4th.
Most investors changed their trading positions in the hope of an even stronger dollar. It should be noted that the American currency gained considerable strength against other majors, not to mention emerging currencies. In particular, USD reached multiyear highs against EUR and JPY in late October. Possible profit-taking along with exposure reduction led to a bearish reaction of the USDJPY exchange rate yesterday, on November 4th.
At the same time, investors and traders are concerned about a relatively low rate of inflation coupled with a global economic slowdown. Oil prices dropped almost 29% as opposed to mid-June highs triggered by higher supply and lower demand.
Today’s rally of USDJPY is backed by the strengthening of the Japanese stock market. Nikkei 225 gained 0,88%. Despite the uptrend of US stock indices, yesterday the market closed in the red zone amid lower trading volume. Nasdaq saw a volume decline while NYSE saw an volume increase. S&P500 saw the first day of redistribution or major sales thereby going 0,28% down. Nasdaq lost 0,33%.
The Japanese stock market closed today in the green zone fro the 5th trading session in a row. Nikkei Stock Average gained 0,4% to hit 16937,32 after a 2,7% rally a day before. Over the course of the last 4 session, the index has already gained 10%
USDJPY Prospects
The US Dollar set another multiyear high against the Yen, thereby resuming the rally after yesterday’s correction. The American currency went higher to hit 114,50 backed by the news that the Republicans got the majority of seats in the Senate of the US Congress, thereby toughening the political opposition relative to Barack Obama. Most probably, the rally will continue up to 115,75, Masterforex-V Academy reports.
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