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JPY news - page 22

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Japan Nikkei PMI for October: Services 50.5 (prior 48.2), Composite 51.3 (48.9)


Good jumps into expansion for both of these indicators from Japan today

Key points from Markit / Nikkei:
  • Output increases at Japanese services firms, supported by sharpest expansion in new orders since February
  • Business expectations strongest in six months
  • Inflationary pressures intensify to the greatest in eight months in the service sector
And, comments from Amy Brownbill, economist at IHS Markit:
  • "Latest PMI survey data pointed to a further improvement in business conditions at Japanese services firms. This was also reflected in the manufacturing sector, which in turn led to the sharpest expansion in overall private sector activity since January.
  • The PMI data and IHS Markit's GDP forecast of 0.9% y/y in Q4 (the highest reading since Q3 2015) both suggest the short-term outlook for the economy looks bright."
  • "Moreover, business sentiment at Japanese services picked up to a six-month high, linked to expectations of greater demand from preparations in hosting the 2020 Tokyo Olympic Games, the launching of new products and the opening of new businesses."

USD/JPY Weekly Forecast for November 7-11


The financial markets switched gears in the past week as a US rate hike was overshadowed by the upcoming American elections. The Federal Reserve delivered arguably the most hawkish policy statement this past week, but the Dollar failed to gain. Throughout the week, a typical sentiment of risk aversion was seen with global equities broadly declining and safe haven assets gaining, however, the latest positioning report failed to show real demand for safe haven currencies.

The Federal Reserve released their latest monetary policy statement on Wednesday, shifting their rhetoric regarding inflation for the first time since it had become apparent in late 2014 that declining energy prices would suppress inflation and consequently hinder the path of normalization. The central bank indicated that inflation has moved higher this year and removed a clause that stated expectations for inflation were to remain lower in the near-term. With inflation continuing to be the largest barrier in the Fed’s ability to raise rates, the shift in rhetoric suggests that markets may not just view a December rate hike as a one and done, but look to further progress in the path of normalization in 2017, opening up the path for further Dollar gains.

The US Dollar has turned lower following reports that the FBI were looking to reopen presidential candidate Hillary Clinton’s email investigation. The trade-weighted index posted a loss in the past week that has taken the index back towards levels seen in early October. The Dollar declined against almost all of its major counterparts this past week with the exception of a marginal gain versus the Loonie.

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The Bank of Japan monetary policy meeting minutes from September

Pretty much ancient history now, but the changes at the meeting were significant, with the policy framework modified (yield curve control the biggie)
  • Some members said firms' cautious price-setting behaviour might continue for longer than expected
  • Many members shared the view that QQE had lowered real interest rates by raising inflation expectations and pushing down nominal interest rates
  • One member said it was necessary to implement monetary policy that would raise inflation expectations
  • Many members said rise in inflation expectations might take time

  • One member said change in the yield curve after adoption of negative rates had been largely induced by temporary, somewhat speculative moves

USD/JPY: Watch For Japan's Intervention On A Trump Win


The USD was the best performing currency in the G10 and the JPY the worst performer on early Monday trading.

On Sunday FBI Director, James Comey, told Congress that an examination of new emails related to Hillary Clinton’s private server had reaffirmed his earlier decision not to recommend prosecution. The AUD was the second best performing currency as investors decided to put risk back on. The final polls trickling in point to Clinton narrowly leading Trump. The latest poll by NBC News and the WSJ points to Clinton leading Trump 44% to 40%. This close to polling day it is difficult to judge the size of the impact of the FBI findings.

With this in mind, we think that it is unlikely that the FX market will significantly extend the current USD and JPY-cross rally.

...But Japan’s officials are still “worried”. Japan’s ‘FX Intervention Tsar’, Masatsugu Asakawa, remains “worried about the JPY after the US election”, however. In a clear warning to investors, Asakawa has not ruled out intervention in the event of “disorderly moves” in FX. So in the event of a Donald Trump victory this week, the MoF has already threatened intervention to prop up the USD/JPY.Importantly, Asakawa’s language is consistent with G20 Communiques on FX, which allows for intervention in the event of “disorderly” moves in FX.


source

"The yen is looking like a long-term winner after the U.S. presidential vote"


Bloomberg with a bullish view on the yen

  • JPMorgan Chase & Co. and HSBC Holdings Plc say that neither Democrat Hillary Clinton or Republican Donald Trump will favor a stronger dollar, so any short-term fluctuations in the yen as the vote nears are likely to give way to gains for the Japanese currency over the longer term. An expected Federal Reserve rate increase also may already be priced in.
The results from the latest Bloomberg survey line up with this view:
  • The median projection from strategists surveyed by Bloomberg has the currency rising to 103 per dollar by March 31. That level hasn't shifted since analysts last boosted their yen estimates early last month.

USD/JPY Following Through on Monday’s Advance


Dollar strength on Monday lifted USD/JPY from a test of key support near the 102.67 level, defining the lows established in early October. The dollar rebounded sharply on the news that U.S. Presidential candidate Hillary Clinton will not face criminal charges related to the use of a private email server. The pair reached 104.632 for a high on Monday and is currently up a quarter of a percent over Monday’s N.Y. close, trading at the 104.74 level.

A sustained breakdown below the 102.67 level would have turned the broader outlook for USD/JPY negative, suggesting an important top had been established. However, the ability to hold this support and the extent of the subsequent follow through rally suggests a return to the recent highs is forthcoming.

The current high for the advance from the September lows stands at 105.532 and represents a test of the high established in late July at 105.632. This level was noted as potential resistance ahead of the target price at the 107.494, representing the July peak. Signs of hesitation up against the recent highs on the daily chart would imply the pair is in the process of forming a top. Thus, near term price action will be important for USD/JPY.

With the Stochastic, a price momentum indicator, moving higher but still below overbought levels, the path of least resistance over the near term is to the upside, with a retest of near term resistance expected. A retest of the highs will likely coincide with the development of an overbought condition on the daily chart. Maintaining an upside bias in the presence of an overbought condition would be a sign of underlying strength, increasing the probabilities of a move to the target price above the 107 level.

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Trump Wins: Buy USD/JPY Dips & Stay Long EUR/JPY


The surprising US election result may suggest near-term USD weakness against low-yielding currencies, but we would regard the dip as providing a long-term USD buying opportunity.

President Trump supported by a Republican House and Senate is likely to turn the monetary/fiscal mix around. The US’s fiscal approach is likely to become more expansionary, which should push the nominal US yield curve into steeper territory, followed in the longer run by higher real rates.

The change of the US monetary/fiscal policy mix should allow the yield curve to look more attractive for foreign inflows, suggesting USDJPY to rally.

Our favoured trading strategy is to buy the USDJPY dip and EURJPY.

Morgan Stanley maintains a long EUR/JPY* from 115.40 targeting 122.

Japan data - PPI (October): -0.1% m/m (expected flat at 0.0% m/m change)


For the y/y, -2.7%
  • expected -2.6%, prior -3.2%
For the m/m, -0.1%
  • expected 0.0%, prior also 0.0%

USD/JPY forecast for the week of November 14, 2016


The USD/JPY pair had an extraordinarily volatile week. Initially taking after the election of Donald Trump, the pair has skyrocketed since then and is now threatening to test the 107.50 resistance barrier. The market is overbought at the moment though, and as a result I prefer buying short-term pullbacks. A break above the 107.50 level is very bullish though, and I do believe that we are in the process of changing the trend to the upside. However, it might be easier to deal with on short-term charts going forward.


US Dollar To Yen FX Insight: Bullish USD / JPY Conversion Rate Is Among Morgan Stanley’s Favorite Trades


The USD to JPY Exchange Rate Rise Triggered as Foreign Currency Investors Consider Possible Trump Moderation

Morgan Stanley considers bullish USD/JPY trade as one of their favorites on the forex markets.

Their view is supported by the reflationary expectations in the US, steepening yield curve due to added fiscal stimulus and increased risk appetite.

They believe the US Federal Reserve is on course to hike rates in December, which will push both the short-term and the long end US yields higher.

The rising yields across the world are likely to increase the differentials with the Japanese yield curve, which is currently being managed by the Bank of Japan, which maintains the 10-year yields close to zero levels.

Analysts at Morgan Stanley believe that “a global fiscal stimulus impulse may push the MoF to take part which, with long term yields pinned, could provide a substantial boost to Abenomics and weaken JPY further.”

Morgan Stanley believes that the US dollar is likely to strengthen going forward on the back of fresh fiscal stimulus push by Trump, trade policy changes in favor of the dollar and the comprehensive tax reforms.

“Rising nominal yields should support the USD against low yielding currencies such as the JPY,” said the report.

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