JPY news - page 20
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USD/JPY: A Break Through 105 Would Target 108; Oil Prices Key
The broad-based strengthening of the US dollar is helping to lift USD/JPY back towards the top of its recent narrow trading range between the 100.00 and 105.00 levels. The reduced likelihood of Donald Trump becoming President has reduced the risk that USD/JPY could break below the 100.00-level in the near-term. It has provided strong resistance in recent months as USD/JPY has attempted and failed to break the 100.00-level on four separate occasions. Over the last week USD/JPY has traded above the top of the Ichimoku cloud for the longest period since the down trend started late last year signalling that downward momentum has eased in the near-term.
With risks becoming more balanced for the pair, upside could extend further towards if key resistance level at the 105.00-level is broken rising towards the 200-day moving average at just above the 108.00-level.
The ongoing rebound in the price of crude oil is weighing modestly on the yen as well in the near-term both through weakening Japan’s terms of trade and supporting higher yields overseas. The recent pick-up in inflation expectations is a negative development for the yen. The price of crude oil has extended its rebound over the last week rising back above USD50/barrel...
If the price of oil continues to extend its rebound into year-end, our forecast for USD/JPY to fall below the 100.00-level maybe delayed into next year.
source
BOJ's Kuroda says the bank will ease further if needed & benefits outweigh costs
Bank of Japan Governor Kuroda in the Diet today. Remarks via Reuters:
Dollar falls from 2-1/2 month high vs yen after weak China trade data
The dollar pulled back from a 2-1/2 month high against the yen on Thursday after surprisingly weak Chinese trade data stirred fresh concern about the world's second-largest economy.
The dollar dropped to as low as 103.555 yen at one point, down 1 percent from the day's high of 104.635 yen, which was the greenback's strongest level since late July.
The dollar last stood at 103.84 yen, down 0.3 percent from late U.S. levels on Wednesday.
The safe haven yen pushed higher after data showed that China's exports denominated in yuan fell 5.6 percent in September from a year earlier.
September dollar-denominated exports later showed that exports fell 10 percent from a year earlier, far worse than expected.
China's imports unexpectedly shrank 1.9 percent after picking up in August, suggesting recent signs of steadying in the economy may be short-lived.
The weak Chinese trade data triggered a fall in equities and a drop in U.S. bond yields and gave a lift to the yen, a safe haven currency that tends to rise in times of market stress.
"There have been expectations that the Chinese economy is stabilizing because of fiscal stimulus... at the same time there's also expectations that the global trade slowdown that we have endured seems to be coming to an end," said Sim Moh Siong, FX strategist for Bank of Singapore.
"I think this Chinese data has challenged the expectations," he said.
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USD/JPY Weekly Forecast October 17-21
Following last week’s technical break, USD/JPY continued higher in the past week to gain 1.17%, breaking above the 104.00 handle. A further shift in sentiment was seen in the past week, as the pair briefly broke to two and a half month highs, and a notable shift in positioning was indicated in the COT report.
USD/JPY had broken above a declining channel last week that had encompassed price action over the past nine months. The bullish break has provided some initial indications of a broader reversal, with the latest COT report indicating a notable reduction in the net long Yen position, supporting the shift in sentiment.
Non-commercials reduced their bets in the Japanese Yen with a week over week decline of $2.8 billion to bring the net long down to $5.5 billion. The shift came entirely from covering of long positions, with a marginal increase in short contracts. The data is accurate for the week to October 11, covering the period of the technical break.
Momentum in the rally this week slowed, with the pair mostly trading around the 104.00 handle, struggling to make a sustained break. The pair posted a high of 104.635 this week, reflecting the highest level since the start of August. The highs set this week have served to print a succession of higher highs and higher lows, further adding to the potential of a broader reversal in the pair.
A similar break was seen in the Nikkei 225 recently as the 200-period moving average has been broken to the upside. The index posted a small loss this week but has remained above the moving average.
The Federal Reserve’s release of minutes from their September meeting caused little volatility in the financial markets, with market expectations for a December rate hike remaining relatively unchanged. FOMC members were generally content with labor markets while some pointed out a slowing in the rise of inflation. It was emphasized that the latest monetary policy statement indicating a case for a rate hike has strengthened should not be viewed that a “passage of time” would warrant a rate hike. With the Fed remaining data dependent, upcoming data will be important, with a focus on inflation related releases.
source
Japan - Reuters Tankan: October manufacturers' sentiment index +10 (+5 in Sept)
The Reuters Tankan comes out monthly, while the official, BOJ, Tankan is quarterly
More:
Japanese Industrial Production Rises 1.3% in August, Final Data Confirm
Japan’s industrial production expanded sharply in August, final data confirmed on Monday.
Industrial output advanced 1.3% from July, following a 0.4% decline, Japan’s Ministry of Economy, Trade and Industry said in a final estimate. Preliminary data last month showed a 1.5% increase.
Compared to the same period a year ago, industrial production climbed 4.5%, the fastest since 2014. According to analysts, the solid uptick in August raises the outlook on Japan’s third quarter GDP. The Japanese economy expanded just 0.2% in the second quarter, up from a preliminary estimate of zero.
Japan’s data release set the stage for what’s expected to be a highly active week in the financial markets. Global economic reports on CPI inflation will make headlines on Tuesday, leading to a deluge of Chinese economic indicators on Wednesday that include GDP, retail sales, industrial production and fixed-asset investment.
The yen has declined sharply this month now that the Bank of Japan (BOJ) is committed to keeping 10-year Japanese government bond yields anchored near zero. For this reason, the outlook on the USD/JPY exchange rate has been revised higher.
The pair has also benefited in recent weeks from speculation the US Federal Reserve will raise interest rates by year-end. Fed Fund futures rates currently imply a nearly 70% probability of such a scenario playing out.
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Japan's largest unions to seek ~2% increase in base wages during spring 2017 negotiations
Japan press (Nikkei) giving an early heads up to spring wage negotiations
- Says the Nikkei: "Various industry unions will use the target as guidance when formulating their own demands"
- But falling prices and a stronger yen, which puts pressure on corporate earnings, likely will work against wage hikes this time
- But
President Rikio Kozu defended the target at a news conference Thursday,
arguing that halting progress on wage hikes would cause Japan to slide
into deflation once again
The article is here for moreUSD/JPY forecast for the week of October 24, 2016
The USD/JPY pair initially fell during the course of the week but turned around to form a little bit of a hammer. The 105 level above is massively resistive, but I think we are going to eventually build up enough momentum to break out. Once we do, I think we go to the 107 level, and then much higher than that. I believe that pullbacks continue to offer buying opportunities as they will be looked at as potential value while we build up a bit of a base in this marketplace.
Japan’s Manufacturing Sector Expands at Fastest Rate in Over a Year – Nikkei Flash PMI
A private gauge of Japanese manufacturing activity expanded sharply in October, strengthening the case that the worst of the manufacturing downturn had passed.
The Markit/Nikkei flash manufacturing purchasing managers’ index (PMI) came in at 51.7 in October, up from a final September reading of 50.4. Analysts in a median estimate called for an increase to 50.6.
A PMI reading above 50 indicates expansion in economic activity. The flash PMI report accounts for roughly 85-90% of all survey responses. Markit/Nikkei will release the produce the final PMI report October 1.
The October reading was the highest since July 2015, and followed the first expansion in headline PMI in seven months. Output, new export orders and employment increased at a faster rate this month, while new orders returned to positive territory.
“Data suggested that a strong expansion in foreign demand led to the rise in total new orders, as new exports rose at the fastest rate in nine months. Not surprisingly, goods producers were more confident to take on additional workers, with the rate of job hiring picking up to a two-and-a-half year high. Firms also benefitted from lower cost burdens, as input prices declined,” Amy Brownbill, economist at IHS Markit, said in a statement.
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Japan press: "Yen seen calmly marching lower against dollar"
From the Nikkei today "Yen seen calmly marching lower against dollar" (may be gated)