The yen managed to hold positions against the US dollar on Tuesday, which halts its rally, as expectations for early Japanese elections later in the month began to reflect in the price. The euro stabilizes at around $1.1730 and puts break on the downward movement that began following the independence referendum held in Catalonia on Sunday.
In the early hours of Tuesday, the dollar moved to 112.75 yen, despite the bulls that supported it, such as US activity data showing the highest level for the past 13 years, as well as recent upward movements in bond yields. Option market data is showing increasing activity from traders in an attempt to hedge the currency risk before the lower house election that could negatively affect Prime Minister Shinzo Abe’s plan to secure growth in the economy.
The prime minister himself dissolved parliament last week and scheduled early elections on October 22nd. The expectation was that his party would win with ease, but in the last days the opposition formed a stable coalition and could be a serious obstacle to Abe’s plans. The dollar index rose from around 0.1% to 93.65 points
Gold reached 7-week low on Tuesday, together with rising dollar, spot price declined by 0.1% to $ 1,269.5 per ounce. Good data on production activity and rising yields on bonds were the reason that led to price movements. Futures contracts with delivery in December lost 0.3% of their value and reached $1,272.5 per ounce. Dallas Fed President Robert Kaplan expressed confidence on Monday that the Fed could raise interest rates without waiting for inflation to reach the target of 2%, which provides significant support for expectations of interest rate hikes.
Fears of saturation have returned to the oil market and stayed for a second consecutive day. On Tuesday, the WTI barrel price dropped 14 cents to 50.44 dollars, and last week lost 2.1 percent. The US variety marked a strong quarter, achieving a growth of about 12%, but dropped its price by 5% of the peak reached during the rally. The Brent fell 1.2 percent on Monday and prolonged the loss Tuesday morning, losing another 0.3 percent to a barrel price of $ 55.93.