Carlsquare/Vontobel weekly trading note: The focus is on Nvidia this week
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This week, we are focusing on the USD/JPY currency pair. Given that the prospect of a US interest rate cut has diminished, we believe that the USD could strengthen. Meanwhile, weaknesses in the Japanese economy are unlikely to increase the value of the yen. Separately, concerns over whether the Fed will cut interest rates in December have led to a decline in global stock markets. Investors are also awaiting Nvidia's quarterly report on Wednesday.
The longest shutdown of the US government has finally come to an end. This could help stabilize the US economy and strengthen the US dollar. The likelihood of the Federal Reserve cutting interest rates in December has fallen to around 40 per cent. Meanwhile, the Japanese yen is under sustained downward pressure. Prime Minister Sanae Takaichi's support for prolonged loose fiscal and monetary policies suggests that Japan will continue to maintain accommodative conditions. Furthermore, the significant interest rate difference between Japan and the US has resulted in sustained yen weakness.
European and US stock markets ended last week on a weak note, with most of the leading indices in the red on Friday 14 November. Investors are becoming increasingly unconvinced that the Federal Reserve will further cut interest rates at its December meeting. Additionally, attention is turning to the high valuation of the AI-related stock sector in the US, which is having a significant impact on developments in stock markets around the world.
Please find out more in our weekly letter on certificates Vontobel.com: Read the weekly newsletter here
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