JPY news - page 15
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USD/JPY Approaches Significant Channel Resistance
USD/JPY moved sharply higher today as the US Dollar was seen as the strongest currency, while the Japanese Yen posted the largest loss. The pair has reached a high of 103.13 and was last seen at 103.00 for a gain of 1.08% on the day. The pair is getting closer to resistance, as the top of a declining channel is seen within reach for the pair.
The declining channel dates back to late January highs in the pair and has encompassed price action in the broader downtrend seen this year. While the channel top can provide strong resistance, as a horizontal level at 103.73 adds further confluence, a break higher carries potential following increased optimism towards a near-term US rate increase.
Over the past two weeks, several comments from Fed members have suggested that the central bank is in a good position to raise rates. Fed chair Yellen’s speech on Friday provided confirmation to the markets, and the US Dollar has remained firm since. Pricing in futures markets has since indicated an increase in odds for a near-term rate increase. Current September probabilities are seen at 27%, while December rate hike probabilities fall at 55.4%. A three-day recovery in the US Dollar index (DXY) following Yellen’s speech, has served to bring the index back into the green for the month, and momentum in the recovery is yet to show signs of slowing. Recent rhetoric from BoJ Governor Kuroda further supports a broader rally in the pair as the Governor has reaffirmed to markets that the bank will do what it takes to revive the economy.
Positioning in the Japanese Yen is also driving the pair higher. With the stronger uptrend in the Japanese Yen seen this year and the shortfall in expectations from the Japanese stimulus program released earlier, markets have been piling into Yen longs. The extreme positioning has resulted in the Japanese Yen realizing the largest losses in the early week, as the Dollar turns higher.
Japan Q2 Capex, company profits and sales data
Japan second quarter capital expenditure data (and more) for the Ministry of Finance
Japan finance minister Aso comments on G20, Japan economy
Aso on the wires with a few remarks, not world-changing stuff really
USD/JPY forecast for the week of September 5, 2016
The US dollar rallied significantly during the course of the week, as the Bank of Japan continues to assert its will in this market. Ultimately, I think that were going to try to reach towards the 105 level, and then after that maybe the 108 level. I think pullbacks are buying opportunities, but quite frankly to be easier to do this off of shorter-term charts so I’m not a big fan of this particular chart unless of course you have the ability to not only buying this pair, but to hang onto it for the longer term through all of the potential volatility I see above. I have no interest in selling.
USD/JPY Weekly Outlook September 5-September 9
USD/JPY rose to a one-month high on Friday in the wake of the weaker than expected U.S. nonfarm payroll report. The data showed payrolls rising 151K versus a consensus forecast of 180K. While the dollar initially dropped on the news, the basket of currencies did not sustain the loss and ended Friday’s session with a 0.24% gain. USD/JPY ended the session up three quarters of a percent at 103.97, its best level since July 29th.
The weaker than expected jobs data in the U.S. has reduced the odds of the Federal Reserve tightening at its September meeting. According to Fed Funds futures, the market is now pricing in a lower chance of a hike in Sept. (about 21% versus 34% on Thursday) while the contract is pricing in a 55% chance of a hike in December versus a 59% likelihood on Thursday. These data also come after a surprisingly poor reading on U.S. manufacturing data. U.S. ISM Manufacturing missed estimates on Thursday, coming in at 49.4 versus a forecast of 52 and a previous reading of 52.6 in July. The slip back into contraction mode with a reading below 50 is a negative for third quarter GDP growth prospects. The dollar has proven resilient, however, with DXY ending last week with a 0.42% gain over the prior Friday. USD/JPY, closed the week out with a gain of just over 2% over the prior Friday.
As a result of last week’s advance, USD/JPY is now testing the 61.8% retracement of the July-August decline, as well as a key falling resistance line dating back to January. A sustained break above this resistance line would increase the prospects for further gains in the pair in the coming weeks. The next level of important resistance for the pair is at the 107.50 level, defining the July 20/21 highs. A sustained break above this level which is, granted, currently nearly 3% above current levels, would confirm a double bottom reversal pattern at the June/August lows, a development that would leave the upside target at 115.00.
However, much work needs to be done before the double bottom is confirmed, including taking out the falling 100-day moving average, which currently stands at the 105.40 level. This moving average has kept a solid lid on the pair throughout 2016, with only a brief and unsustained break above occurring in late January.
With overbought conditions now a factor on the daily chart, the pair could experience at least a brief period of consolidation in the near term. First support has been established at the 102.86/102.80 level, with the now rising 50-day moving average providing added confirmation, as it currently stands at 102.65. Should the pair dip further, a 50% retracement of the recent advance would result in a drop just below the 102 handle.
However, with the recent action, the probabilities appear to favor further upside in the pair, following any period of consolidation. And, according to the latest Commitment of Traders report from the Commodity Futures Trading Commission, released Friday with data as of the August 30th close, large speculators still maintain a heavily biased long position in Japanese Yen futures, with net positioning at 63,661 long contracts following a net long position of 60,316 contracts as of August 23rd. A further drop in yen futures could result in the liquidation of these longs, adding further fuel to the slide in the yen and rise in USD/JPY.
Late next Wednesday, the final 2Q GDP for the Japanese economy is forecast to show QoQ growth of 0%, from 0.5%, while YoY falls to 0.2% from 2%. The GDP print will be combined with the Balance of Payments reading that will help traders see how the export-dependent economy is faring. In the U.S., which is closed Monday for the Labor Day holiday, Tuesday’s calendar contains ISM Services.
Japan Labor cash earnings: +1.4% y/y (expected +0.4%, prior +1.4%)
Kuroda Speech Lifts Yen
With the BoJ’s Comprehensive Assessment of monetary policy currently taking place ahead of the next policy meeting on 21st September, the speech today by Governor Kuroda in Tokyo was always going to be in full focus for the financial markets. The fact that Governor Kuroda gave a portion of his speech to outlining the negative impact of lowering rates below zero percent helped ease speculation of further cuts to the key policy rate and helped lift the yen.
However, those comments were in the context of Governor Kuroda explaining that “there is no free lunch” and that even though certain policies may have costs, if the ultimate benefit is achieved (higher inflation) then the negative impact of negative rates is acceptable.
Governor Kuroda also appeared to address specifically the speculation in the market that the BoJ may decide to slow the pace of JGB purchases by stating there would be no reduction in monetary stimulus as was “being called for by some market participants”.
We are maintaining our view that additional rate cuts will be forthcoming by the BoJ but not necessarily at the meeting on 21st September and with expectations so high there is certainly a clear risk of another surge of the yen on disappointment in the aftermath of the policy meeting this month.
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USD/JPY: Possibility Of 100 Break Shifted From 3:1 Two Weeks Ago To 2:1 - Deutsche Bank
Expectations for a Japan/US monetary policy gap and for G20 policy mobilization following on from Abenomics will likely see buying that functions to cap downside risk for the USD/JPY. We also see some position adjustments by yen bulls and hedging by Japanese importers might be supporting a firm floor for the USD/JPY at 100-105 for a while. The focus for the dollar/yen rate over recent weeks was on a possible fall below 100 as a crucial technical threshold. This possibility appears to have shifted from 3:1 two weeks ago to 2:1.
However, as has been the case over the last one and a half years, market sentiment seems prone to fluctuate between risk-friendly and risk-averse every some months. Global fundamentals remain insufficiently strong to sustain risk-friendly momentum. The focus for the US economy is on whether the end of the current expansion cycle will be prolonged through next year or whether sentiment emerges that the peak could be sooner. It is not on the start of a new expansion cycle. A dollar/yen rebound will likely not be sustainable as long as the US economy does not once again show sufficient firmness to justify multiple interest rate hikes.
If the USD/JPY moves above the 100-105 zone as, triggered by coming policy events and economic indicators, sentiment of technical support in play would likely be further reinforced. However, we still see that it could swing back after confirming the 21 September events without getting over the 105 level largely and exhibit renewed bias toward 100.
source
USD/JPY Slightly Lower Following Monday’s Pullback
USD/JPY is modestly lower in today’s trading, currently at 103.29, down 0.12% from Monday’s levels. The pair experienced its largest decline since mid-August yesterday, having come into this week’s trading heavily overbought as a result of the prior week’s gain of more than 2%. Overhead resistance at the 61.8% retracement of the July-August decline, as well as a key falling resistance line dating back to January, was also in play coming into this week. A sustained break above this resistance line would increase the prospects for further gains in the pair in the coming weeks. Thus, USD/JPY appears to be at a critical juncture.
The current downside reaction to what became a heavily overbought condition does not damage the pair’s prospects for further gains. First support has been established at the 102.80 level, with the now rising 50-day moving average providing added confirmation, as it currently stands at 102.70. Should the pair dip further, a 50% retracement of the advance from the mid-August lows would result in a drop just below the 102 handle. A decline to 102 would still leave the pair well-positioned to resume its recent climb.
USD/JPY Reverses Sharply on Poor Services ISM Figures
A disappointing Services PMI release from the United States sent the Dollar tumbling, and USD/JPY sharply lower. The pair has nearly erased gains from the prior week and has negated an earlier technical break.
The Institute of Supply Management (ISM) non-manufacturing index dropped to 51.4 in August against analyst expectations of 55.4 and a prior reading of 55.5. The data follows a significant drop in the ISM manufacturing index in the prior week and has dampened investor optimism for a near-term rate hike. Last week’s ISM data was reported to decline to 49.4 against an expected 52.0.
USD/JPY had shown signs of a technical break following Friday’s jobs figures. The pair had scaled above a declining channel dating back to highs from late January. The decline today has dropped the exchange rate back below the channel, negating the prior bullish outlook. The pair has already fallen through the first level of support seen at 102.46 as the decline carries strong momentum behind it.