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CFD Trading Rate US Dollar vs Japanese Yen (USDJPY)

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  • 11.11.2024 10:41
    USD/JPY: Set to trade in a range of 152.50/153.85 – UOB Group

    Sharp pullback appears to be overextended; instead of continuing to weaken, the US Dollar (USD) is likely to trade in a range of 152.50/153.85. In the longer run, upward momentum has slowed sharply and quickly; a break of 152.50 would mean that USD is likely to trade in a range instead of heading higher, UOB Group FX analysts Quek Ser Leang and Peter Chia note.

    Sharp pullback appears to be overextended

    24-HOUR VIEW: “When USD was at 154.55 yesterday, we indicated that ‘the overbought USD rally could extend above 155.00 before pausing.’ However, USD did not rise above 155.00. Instead, it pulled back sharply to 152.69. The pullback appears to be overextended, and USD is unlikely to weaken much further. Today, USD is more likely to trade in a range between 152.50 and 153.85.”

    1-3 WEEKS VIEW: “We highlighted yesterday (07 Nov, spot at 154.55) that’ the spike in momentum suggests USD could continue to rise, possibly to 156.00.’ The subsequent steep pullback was surprising, and upward momentum has slowed sharply and quickly. From here, if USD breaks below 152.50 (no change in ‘strong support’ level), it would mean that USD is likely to trade in a range instead of heading higher.”

  • 11.11.2024 10:21
    USD/JPY jumps above 153.50 amid uncertainty over BoJ rate hike prospects
    • USD/JPY surges above 153.50 amid uncertainty over scope for further BoJ policy-tightening
    • Japan’s growth outlook appears to be weak as Shigeru Ishiba fails to form a majority government.
    • Trump’s victory has dampened Japan’s export sector outlook.

    The USD/JPY climbs above 153.50 in European trading hours on Monday. The asset strengthens as the Japanese Yen (JPY) has weakened across the board amid growing uncertainty over when the Bank of Japan (BoJ) will hike interest rates again.

    The BoJ Summary of Opinions (SOP) for the October policy meeting showed that officials were divided over the timeframe for further policy tightening. Market experts believe that political uncertainty and likely consequences of Republican Donald Trump’s victory in the United States (US) presidential elections on Japan’s economic outlook have limited the scope for BoJ to deliver more rate hikes.

    Liberal Democratic Party (LDP) leader Shigeru Ishiba is elected as prime minister again on Monday but has to lead with a minority government, given that its part lost its lower house majority held since 2012, a scenario that is unfavorable for smooth implementation of government policies.

    Meanwhile, Trump’s landslide victory in the US, who is expected to take both the Senate and the House of Representatives is expected to weigh on Japan’s export sector. Trump vowed to raise import tariffs by 10% universally, which will weaken the scale of exports from Japan, being one of the leading trading partners to the US.

    Trump’s victory has kept the US Dollar (USD) on the front foot. The US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, inches closer to a four-month high of 105.45.

    This week, investors will focus on the US Consumer Price Index (CPI) data for October, which will be published on Wednesday. Economists expect the annual headline inflation to have accelerated to 2.6% from 2.4% in September, with core figures growing steadily by 3.3%.

     

  • 08.11.2024 15:16
    USD/JPY Price Forecast: Pulls back to major trendline, uptrend still intact
    • USD/JPY declines to a major trendline and finds support. 
    • It remains in an uptrend that could resume and push higher. 

    USD/JPY has pulled back to support from a major trendline for the long-term uptrend at about 152.55. Despite the correction, the pair is in an uptrend on a short and medium-term basis and given the technical analysis dictum that “the trend is your friend” the odds still favor a recovery and eventual continuation higher.

    USD/JPY 4-hour Chart 

    A break above the 154.71 November 7 high would renew the uptrend and probably lead to a continuation up to resistance at 155.24, the July 30 high. A break above that would provide a stronger bullish signal and might lead to a target at 157.86 (July 19 high).  

    Alternatively, a break below the trendline and then also below 151.29 might indicate a bearish reversal of the trend over the short-term. Such a move could follow-through lower to a target at 150.15 where support from the 100-day Simple Moving Average (SMA) (not shown) kicks in. 

  • 08.11.2024 12:49
    USD/JPY: Bias for downside play – OCBC

    USD/JPY slipped as Trump trades unwind. Near term, election noises in US and Japan may cloud the outlook for JPY but more likely than not, election uncertainty in US and Japan should come to pass. Pair was last seen at 152.41, OCBC’ FX analysts Frances Cheung and Christopher Wong note.

    Daily momentum is mild bearish

    “BoJ is expected to uphold central bank independence and Governor Ueda had earlier said that the current political situation in Japan wouldn’t stop him from lifting rates if prices and the economy stay in line with BoJ’s forecast. On the data front, Recent labour market report also pointed to upward wage pressure in Japan with 1/ jobless rate easing, 2/ jobto-applicant ratio increasing to 1.24; 3/ trade unions calling for another 5-6% wage increase at shunto wage negotiations for 2025.”

    “Wage growth pressure remains intact, alongside broadening services inflation and this is supportive of BoJ normalizing rates. We still look for USD/JPY to fall into 1H 2025 as Fed and BoJ continue to pursue policy normalisation. This should continue to underpin the broad direction of travel to the downside. One risk to watch is potential Trump tariff on the world as that may impact global trade, growth and pose risks to US disinflation journey and Fed policy.”

    “Any slowdown or pause in policy divergence between Fed and BoJ can affect USD/JPY’s direction of travel. Daily momentum is mild bearish while RSI eased from near overbought conditions. Consolidation likely for now but bias to fade rallies. Resistance at 153.30 (61.8% fibo retracement of Jul high to Sep low), 154.80 (recent high) and 156.50 (76.4% fibo). Support at 151.70 levels (21, 200 DMAs), 150.70 (50% fibo).”

  • 08.11.2024 11:17
    USD/JPY extends correction to near 152.00 on Japan’s intervention alert
    • USD/JPY slides further to near 152.00 as the Japanese yen strengthens after Japana Kato warned of possible intervention.
    • The US Dollar tries to resume its upside trend on Trump policy optimism.
    • On Thursday, the Fed cut interest rates by 25 bps to 4.50%-4.75%.

    The USD/JPY pair falls further to near 152.00 in European trading hours on Friday. The asset weakens despite some recovery in the US Dollar (USD), suggesting a sheer strength in the Japanese Yen (JPY). The Yen gains after Finance Minister Katsunobu Kato alerted that the administration would take "appropriate action" to address excessive foreign exchange fluctuations.

    “Will closely monitor the impact of Trump's policies on Japan's economy,” Kato added. In the comments from Kato, Trump’s policies point to a hike in import tariffs by 10%, which he promised in his election campaign.

    Earlier, Democratic Party for the People (DPFP) leader Yuichiro Tamaki also warned that Trump’s protectionist policies could put further downward pressure on the Yen.

    Meanwhile, the US Dollar Index (DXY), which gauges Greenback’s value against six major currencies, strives to gain ground above 104.00. The US Dollar corrected sharply on Thursday as traders unwinded so-called ‘Trump trades’ and the Federal Reserve’s (Fed) monetary policy guidance was dovish.

    On Thursday, the Fed cut interest rates by 25 basis points (bps) to 4.50%-4.75%, as expected, and showed confidence over the continuation of the policy-easing cycle with confidence that inflationary pressures remain on track to the bank’s target of 2%.

    Japanese Yen FAQs

    The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.

    One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.

    Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.

    The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.

     

  • 08.11.2024 11:03
    USD/JPY: USD is likely to trade in a range – UOB Group

    Upward momentum has slowed sharply and quickly; a break of 152.50 means that USD is likely to trade in a range instead of heading higher, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

    USD/JPY to trade in a range below 152.50

    24-HOUR VIEW: “When USD was at 154.55 yesterday, we indicated that ‘the overbought USD rally could extend above 155.00 before pausing.’ However, USD did not rise above 155.00. Instead, it pulled back sharply to 152.69. The pullback appears to be overextended, and USD is unlikely to weaken much further. Today, USD is more likely to trade in a range between 152.50 and 153.85.”

    1-3 WEEKS VIEW: “We highlighted yesterday (07 Nov, spot at 154.55) that’ the spike in momentum suggests USD could continue to rise, possibly to 156.00.’ The subsequent steep pullback was surprising, and upward momentum has slowed sharply and quickly. From here, if USD breaks below 152.50 (no change in ‘strong support’ level), it would mean that USD is likely to trade in a range instead of heading higher.”

  • 07.11.2024 19:49
    USD/JPY churns post-Fed rate cut, FOMC delivers 25 bps rate trim
    • USD/JPY swirled around 153.20 after the Fed broadly met market expectations on November's rate call.
    • The Fed delivered a follow-up quarter-point cut on Thursday; markets now bet on odds of a December three-peat.
    • According to the CME FedWatch Tool, markets see over 66% odds of one last 25 bps rate trim in 2024.

    USD/JPY roiled just north of the 153.00 handle on Thursday as investors grapple to find something motivational after the Federal Reserve (Fed) widely met market expecations and delivered a quarter-point interest rate cut on November 7. One more rate call meeting remains on the docket for 2024, and market participants remain cautiously optimistic that the Fed has at least one more 25 bps rate trim in the bag for the year.

    According to the CME's FedWatch Tool, rate markets are pricing in about 66% odds of one last quarter-point rate drop in 2024.

    more to come...

    USD/JPY daily chart

    Japanese Yen FAQs

    The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.

    One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.

    Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.

    The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.

     

  • 07.11.2024 10:35
    USD/JPY: Rally could extend above 155.00 before pausing – UOB Group

    Overbought US Dollar (USD) rally could extend above 155.00 before pausing; the next resistance at 156.00 is unlikely to be tested. In the longer run, spike in momentum suggests USD could continue to rise, possibly to 156.00, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

    USD can continue to rise, possibly to 156.00

    24-HOUR VIEW: “We noted yesterday that ‘the outlook is unclear’, and we expected USD to ‘trade in a broad range of 151.20/153.35.’ We did not anticipate the ensuing rally that sent it skyrocketing to 154.70. While severely overbought, the rally in USD could extend above 155.00 before pausing. The next resistance at 156.00 is unlikely to be tested. To keep the momentum going, USD must remain above 153.50, with minor support at 154.00.”

    1-3 WEEKS VIEW: “Our most recent update was from last Friday (01 Nov, spot at 152.05), wherein ‘The USD advance from early last month has ended.’ We indicated that ‘downward momentum is beginning to build, but USD has to break and remain below 151.05 before a more sustained decline can be expected.’ After edging to a low of 151.27 early yesterday, USD jumped and broke above our ‘strong resistance’ level of 153.35. It surged further to 154.70. Given the spike in momentum, USD could continue to rise, possibly to 156.00. On the downside, should USD break below 152.50 (‘strong support’ level), it would mean that the current upward pressure has eased.”

  • 06.11.2024 11:34
    USD/JPY: Sell rallies – OCBC

    USD/JPY rose, as polls skewed in favour of Trump at point of writing. Pair was last seen at 153.91. Daily momentum is flat while RSI rose. Near term risks skewed to the upside. Resistance at 155 and 156.50 (76.4% fibo). Support at 151.60 (200 DMA), 150.60/70 levels (50% fibo retracement of Jul high to Sep low, 100 DMA), OCBC’ FX analysts Frances Cheung and Christopher Wong note.

    US election noises may cloud the outlook

    “Aside from US elections, Japan is holding a special parliamentary session on 11 Nov to choose the Prime Minister. Ishiba’s cabinet will formally resign on the morning of 11 Nov. Prime ministerial vote can take up to two rounds, where in the first round, lawmakers of different political party typically vote for their respective leaders making it unlikely for any candidate to secure a clear majority. In this case, top two candidates will go into a run-off (in the second round) that only requires a simple majority to win.”

    “Assuming no major upset. i.e. Ishiba may still win and a minority government may suffice with opposition DPP and JIP as partners on confidence and supply agreement. Point to note is that these opposition partners had earlier critique BoJ for raising rates. This morning in release of BoJ minutes, one member indicated that policy rate could be 1% in 2H 2025. Last week, Governor Ueda indicated that the current political situation in Japan wouldn’t stop him from lifting rates if prices and the economy stay in line with BoJ’s forecast.”

    “Elsewhere, data continues to show wage pressure growing and services inflation broadening. Policy normalisation at BoJ and Fed takes different form (Fed cut vs. BoJ hike cycle) and this should continue to underpin the broad direction to the downside. But in the interim, US election noises may cloud the outlook. We also caution that any sharp, excessive move to the upside may soon bring in chatters of intervention to smooth one-sided moves.”

  • 06.11.2024 09:57
    USD/JPY surges to near 154.40 as US Trump claims victory over Democrats
    • USD/JPY soars to near 154.40 as US Trump declares victory and is on course to take the Senate.
    • Investors will shift focus to the Fed’s monetary policy meeting on Thursday.
    • The BoJ would struggle to tighten its interest rate policy further.

    The USD/JPY pair refreshes a four-month high near 154.40 in European trading hours on Wednesday. The asset strengthens as the US Dollar (USD) outperforms its rival currencies with the victory of Republican candidate Donald Trump in sight. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, climbs above 105.00.

    According to the Associated Press, Donald Trump has already won three out of seven major battleground states of North Carolina, Pennsylvania, and Georgia and leading over Democratic rival Kamala Harris in the rest.

    Market experts see Trump’s victory as favorable for the US Dollar for a longer-term horizon. Trump vowed to hike tariffs by 10% on imports, except from China which is expected to face even higher and lower corporate taxes. A scenario that will boost domestic investments, employment, and overall demand, which will prompt upside risks to inflation.

    Meanwhile, Trump has declared victory after gaining an undefeatable lead, according to BBC News. With Trump’s victory seeming assured, investors will shift focus to the Federal Reserve’s (Fed) monetary policy decision, which will be announced on Thursday. The Fed will cut interest rates by 25 basis points (bps) to 4.50%-4.75%, according to the CME FedWatch tool. Investors will pay close attention to Fed Chair Jerome Powell’s interest rate guidance after Trump’s victory.

    In Japan’s region, an absence of specific interest rate hike plans in the Bank of Japan (BoJ) policy meeting minutes of October 31 has weighed on the Japanese Yen (JPY). “We will scrutinize data available at the time at each policy meeting, and update our view on the economy and outlook in deciding policy,” BoJ Governor Kazuo Ueda said in the monetary policy statement after leaving interest rates unchanged at 0.25%.

    The BoJ appears to be incapable of further policy tightening as Trump’s victory is expected to impact Japan’s export sector.

    Japanese Yen FAQs

    The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.

    One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.

    Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.

    The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.

     

  • 05.11.2024 14:40
    USD/JPY: Stay short for now – OCBC

    USD/JPY consolidated; last at 151.81 levels. US election makes noise, Governor Ueda’s press conference had some influence too, OCBC’ FX analysts Frances Cheung and Christopher Wong notes.

    Ueda paves the way for BoJ hike in December

    “Bullish momentum on daily chart faded while RSI was flat. 2-way trades likely. Support at 151.60 (200 DMA), 150.60/70 levels (50% fibo retracement of Jul high to Sep low, 100 DMA). Resistance at 153.30 (61.8% fibo), 155 and 156.50 (76.4% fibo).”

    “Ueda spoke about how the current political situation in Japan wouldn’t stop him from lifting rates if prices and the economy stay in line with BoJ’s forecast. He also made reference to FX rates more likely to affect prices in Japan than before. He also said that similar wage deals next year as this year would be good but there is not much information on next year’s shunto yet. Overall, his remarks were more hawkish than expected and is likely to have paved the way for BoJ hike in Dec, which remains our house view.”

    “Recent labour market report also pointed to upward wage pressure in Japan with 1/ jobless rate easing, 2/ job-to-applicant ratio increasing to 1.24 and 3/ even female labour participation rate rose to1.2ppts (vs. a year ago). Wage growth remains intact, alongside broadening services inflation and this is supportive of BoJ normalizing rates while JPY should continue to regain strength.”

  • 05.11.2024 14:33
    USD/JPY trades flattish near 152.00 on US presidential election day
    • USD/JPY remains flat-lined near 152.00 as traders are uncertain about the US presidential election outcome.
    • The Fed is expected to cut interest rates by 25 bps on Thursday.
    • Investors await BoJ minutes to get fresh cues about when the central bank will hike interest rates again.

    The USD/JPY pair trades sideways near 152.00 in the North American session on Tuesday. The asset remains sideways as investors have been sidelined with the United States (US) presidential elections underway. Ahead of the completion of the voting process, traders expect fierce competition between former President Donald Trump and Democratic contender Kamala Harris.

    The pair will be guided by market expectations for the US election outcome, which will be influenced by exit polls. According to analysts at TD Securities, “A Red Wave (favoring Republicans) would kick-start a sizeable USD rally. It would rekindle memories of US Exceptionalism, anchored by tariffs, tax cuts, deregulation, and negative impacts on the outlook for EZ and China."

    At the time of writing, the US Dollar slumps, with the US Dollar Index (DXY) declining to 103.70. This week, investors will also focus on the Federal Reserve’s (Fed) monetary policy decision, which will be announced on Thursday.

    According to the CME FedWatch tool, traders have priced an interest rate reduction by 25 basis points (bps) to 4.50%-4.75%. This will be the second straight interest rate cut, however, the size of rate cut will be smaller as risks of an economic downturn have diminished lately. In September, the Fed reduced its interest rates by 50 bps.

    On the Tokyo front, investors await Bank of Japan (BoJ) monetary policy minutes for the October 31 meeting in which the central bank kept interest rates unchanged at 0.25% for the second time in a row. BoJ Governor Kazu Ueda didn’t provide any cues about more interest rate hikes. “We will scrutinize data available at the time at each policy meeting, and update our view on the economy and outlook in deciding policy,” Ueda said.

    Japanese Yen FAQs

    The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.

    One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.

    Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.

    The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.

     

  • 05.11.2024 09:45
    USD/JPY: To decline after a break below 151.05 – UOB Group

    The US Dollar (USD) is expected to trade in a range, probably between 151.75 and 152.75. In the longer run, USD advance from early last month has ended; it must break and remain below 151.05 before a more sustained decline can be expected, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

    USD/JPY to trade between 151.75 and 152.75

    24-HOUR VIEW: “Yesterday, when USD was at 152.10, we expected it to ‘trade with a downward bias.’ However, we pointed out that ‘as momentum is not strong, any decline is unlikely to break clearly below 151.50.’ We also pointed out that ‘the major support at 151.05 is unlikely to come under threat.’ Our view was not wrong, as USD fell to 151.54, rebounding to close at 152.13. The rebound in slowing momentum suggests the downward bias has eased. Today, we expect USD to trade in a range, probably between 151.75 and 152.75.”

    1-3 WEEKS VIEW: “We indicated last Friday (01 Nov, spot at 152.05) that ‘The USD advance from early last month has ended.’ We added, ‘downward momentum is beginning to build, but USD has to break and remain below 151.05 before a more sustained decline can be expected.’ Yesterday (Monday), USD fell to a low of 151.54. There has been a slight increase in momentum, and it remains to be seen if USD can break clearly below 151.05. Overall, only a breach of 153.35 (no change in ‘strong resistance’ level) would mean that the chance of a break below 151.05 has faded.”

  • 04.11.2024 10:35
    USD/JPY: To trade with a downward bias – UOB Group

    The US Dollar (USD) could trade with a downward bias; as momentum is not strong, any decline is unlikely to break clearly below 151.50. In the longer, USD advance from early last month has ended; it must break and remain below 151.05 before a more sustained decline can be expected, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

    USD/JPY unlikely to break clearly below 151.50

    24-HOUR VIEW: “Our view of USD ‘dropping further’ last Friday was incorrect, as it traded in a volatile manner between 151.77 and 153.09. Although it closed on a strong note at 152.98 (+0.62%), it dropped sharply upon opening today. Despite the choppy price movements, downward momentum has increased somewhat. Today, USD could trade with a downward bias, but momentum is not strong, any decline is unlikely to break clearly below 151.50. The major support at 151.05 is unlikely to come under threat. On the upside, resistance levels are at 152.55 and 153.00.”

    1-3 WEEKS VIEW: “We indicated last Friday (01 Nov, spot at 152.05) that ‘The USD advance from early last month has ended.’ We added, ‘downward momentum is beginning to build, but USD has to break and remain below 151.05 before a more sustained decline can be expected.’ The chance of USD breaking clearly below 151.05 will increase in the next few days as long as 153.35 is not breached. We continue to hold the same view.”

  • 04.11.2024 10:28
    USD/JPY: Stay short – OCBC

    USD/JPY fell sharply amid the pullback seen in USD as Trump trade unwinds. Pair was last at 151.95 levels, OCBC’s FX analysts Frances Cheung and Christopher Wong note.

    JPY set to continue to regain strength

    “Bullish momentum on daily chart faded while RSI fell from near overbought conditions. Near term likely to see further pullback. Support at 151.55 (200 DMA), 150.60/70 levels (50% fibo retracement of Jul high to Sep low, 100 DMA). Resistance at 153.30 (61.8% fibo), 155 and 156.50 (76.4% fibo).”

    “Governor Ueda said that the current political situation in Japan wouldn’t stop him from lifting rates if prices and the economy stay in line with BoJ’s forecast. He also made reference to FX rates more likely to affect prices in Japan than before. He also said that similar wage deals next year as this year would be good but there is not much information on next year’s shunto yet. Overall, his remarks were more hawkish than expected and is likely to have paved the way for BoJ hike in Dec, which remains our house view.”

    “Recent labour market report also pointed to upward wage pressure in Japan with 1/ jobless rate easing, 2/ job-to-applicant ratio increasing to 1.24 and 3/ even female labour participation rate rose to1.2ppts (vs. a year ago). Japan’s trade union confederation (or Rengo) is again calling for wage increase of 5% or more overall and 6% or more for SMEs for 2025. Wage growth remains intact, alongside broadening services inflation and this is supportive of BoJ normalizing rates while JPY should continue to regain strength.”

  • 01.11.2024 11:13
    USD/JPY bounces up and approaches 153.00 with US employment data on focus
    • The Yen resumes its downtrend losses as the effect of the hawkish comments by BoJ Governour Ueda fades.
    • Investors' cautiousness ahead of the NFP report is pushing the US Dollar higher across the board.
    • Technical indicators show the US Dollar rally losing steam.


    The positive impact of Ueda's Hawkish rhetoric after the BoJ’s decision on Thursday has waned and the Yen is losing ground with the US Dollar firming up ahead of the US employment report.

    October’s Nonfarm Payrrols change is expected to have declined to 113K in October from 254K. Hurricanes and strikes are likely to have had a relevant impact on last month's data, thus the market will look at the Unemployment rate -seen unchanged at 4.1%- for confirmation.
     

    Beyond that, the US ISM Manufacturing PMI is seen little changed, at 47.6 from 47.2 in September.

    On Thursday, BoJ Governour Ueda surprised investors, reiterating the bank's commitment to continue normalizing its monetary policy. These comments were taken as a hint to a further rate hike in December, which provided a fresh boost to the Yen.

    From a technical perspective, the broader bullish trend remains intact although the pair might be running out of steam. A break of 151.65 would confirm a deeper correction and shift the focus to 150.60. On the upside, resistances are at 153.00 and 153.85.

    Central banks FAQs

    Central Banks have a key mandate which is making sure that there is price stability in a country or region. Economies are constantly facing inflation or deflation when prices for certain goods and services are fluctuating. Constant rising prices for the same goods means inflation, constant lowered prices for the same goods means deflation. It is the task of the central bank to keep the demand in line by tweaking its policy rate. For the biggest central banks like the US Federal Reserve (Fed), the European Central Bank (ECB) or the Bank of England (BoE), the mandate is to keep inflation close to 2%.

    A central bank has one important tool at its disposal to get inflation higher or lower, and that is by tweaking its benchmark policy rate, commonly known as interest rate. On pre-communicated moments, the central bank will issue a statement with its policy rate and provide additional reasoning on why it is either remaining or changing (cutting or hiking) it. Local banks will adjust their savings and lending rates accordingly, which in turn will make it either harder or easier for people to earn on their savings or for companies to take out loans and make investments in their businesses. When the central bank hikes interest rates substantially, this is called monetary tightening. When it is cutting its benchmark rate, it is called monetary easing.

    A central bank is often politically independent. Members of the central bank policy board are passing through a series of panels and hearings before being appointed to a policy board seat. Each member in that board often has a certain conviction on how the central bank should control inflation and the subsequent monetary policy. Members that want a very loose monetary policy, with low rates and cheap lending, to boost the economy substantially while being content to see inflation slightly above 2%, are called ‘doves’. Members that rather want to see higher rates to reward savings and want to keep a lit on inflation at all time are called ‘hawks’ and will not rest until inflation is at or just below 2%.

    Normally, there is a chairman or president who leads each meeting, needs to create a consensus between the hawks or doves and has his or her final say when it would come down to a vote split to avoid a 50-50 tie on whether the current policy should be adjusted. The chairman will deliver speeches which often can be followed live, where the current monetary stance and outlook is being communicated. A central bank will try to push forward its monetary policy without triggering violent swings in rates, equities, or its currency. All members of the central bank will channel their stance toward the markets in advance of a policy meeting event. A few days before a policy meeting takes place until the new policy has been communicated, members are forbidden to talk publicly. This is called the blackout period.

     

  • 01.11.2024 10:35
    USD/JPY: Enough momentum to threaten the major support at 151.05 – UOB Group

    The US Dollar (USD) could drop further, but it does seem to have enough momentum to threaten the major support at 151.05. In the longer run, USD advance from early last month has ended; it must break and remain below 151.05 before a more sustained decline can be expected, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

    Has a chance to test 151.05

    24-HOUR VIEW: “Yesterday, USD dropped sharply, closing lower by 0.90% at 152.03. Despite the relatively sharp decline, downward momentum has not increased much. However, provided that it remains below 152.85 (minor resistance is at 152.45), USD could drop further. That said, it does not seem to have enough momentum to threaten the major support at 151.05 (there is another support level at 151.50).”

    1-3 WEEKS VIEW: “Our latest narrative was from Tuesday (29 Oct, spot at 153.05), wherein ‘while conditions are severely overbought, there is a chance for the advance in USD to extend to 154.00 before pausing.’ We added, ‘only a breach of 151.90 (‘strong support’ level) would indicate that the USD advance that started early this month has ended.’ Yesterday, USD broke below 151.90, reaching a low of 151.83 Not only has upward momentum faded, but downward momentum is beginning to build. However, at this stage, we view any decline is part of a pullback and not a major reversal. USD has to break and remain below 151.05 before a more sustained decline can be expected. The chance of USD breaking clearly below 151.05 will increase in the next few days as long as 153.35 is not breached.”

  • 01.11.2024 01:13
    USD/JPY weakens below 152.00, US NFP data in focus
    • USD/JPY edges lower to 151.95 in Friday’s Asian session. 
    • The BoJ leaves the door open for a near-term rate hike. 
    • Investors await the US NFP data, which is due later on Friday. 

    The USD/JPY pair softens to around 151.95 during the Asian trading hours on Friday. The Japanese Yen (JPY) edges higher after Bank of Japan (BoJ) Governor Kazuo Ueda’s remarks, which were interpreted as heightening the chance of a rate hike in December.

    The Bank of Japan (BoJ) decided to keep short-term interest rates at 0.25% at its two-day meeting on Thursday. The central bank projected inflation would move around its 2% target in the coming years. "Looking at domestic data, wages and prices are moving in line with our forecasts. As for downside risks to the US and overseas economies, we're seeing clouds clear a bit," said BoJ Governor Kazuo Ueda. The less dovish remarks from the BoJ officials are likely to underpin the JPY in the near term. 

    The US October Nonfarm Payrolls (NFP) data will be the highlight on Friday. The US economy is estimated to added 113K job additions in October, while the Unemployment Rate is expected to remain steady at 4.1%. In case of the weaker-than-expected data, this could prompt Federal Reserve (Fed) dovish bets, exerting some selling pressure on the Greenback. 
     

    Bank of Japan FAQs

    The Bank of Japan (BoJ) is the Japanese central bank, which sets monetary policy in the country. Its mandate is to issue banknotes and carry out currency and monetary control to ensure price stability, which means an inflation target of around 2%.

    The Bank of Japan embarked in an ultra-loose monetary policy in 2013 in order to stimulate the economy and fuel inflation amid a low-inflationary environment. The bank’s policy is based on Quantitative and Qualitative Easing (QQE), or printing notes to buy assets such as government or corporate bonds to provide liquidity. In 2016, the bank doubled down on its strategy and further loosened policy by first introducing negative interest rates and then directly controlling the yield of its 10-year government bonds. In March 2024, the BoJ lifted interest rates, effectively retreating from the ultra-loose monetary policy stance.

    The Bank’s massive stimulus caused the Yen to depreciate against its main currency peers. This process exacerbated in 2022 and 2023 due to an increasing policy divergence between the Bank of Japan and other main central banks, which opted to increase interest rates sharply to fight decades-high levels of inflation. The BoJ’s policy led to a widening differential with other currencies, dragging down the value of the Yen. This trend partly reversed in 2024, when the BoJ decided to abandon its ultra-loose policy stance.

    A weaker Yen and the spike in global energy prices led to an increase in Japanese inflation, which exceeded the BoJ’s 2% target. The prospect of rising salaries in the country – a key element fuelling inflation – also contributed to the move.

     

  • 31.10.2024 13:29
    USD/JPY bounces up and approaches 153.00 following upbeat US data
    • Sticky PCE Prices Index data and an unexpected decline in Jobless Claims have provided support to the US Dollar.
    • Earlier today a hawkishly-tilted Ueda had pushed the Dollar the weekly lows right below 152.
    • The pair consolidates near highs with all eyes on the NFP report.


    The Dollar’s reversal witnessed during Thursday’s Europen session has found support at the 152.00 area. The pair has returned to levels close to 153.00 supported by sticky inflation and lower Jobless Claims data.

    The US PCE Prices Index has kept growing at a 2.1% yearly pace, as widely expected. The core reading, with higher relevance from the monetary perspective, has remained steady at 2.7% against expectations of a 2.6% reading.

    Beyond that, US Jobless claims declined to 216K in the week of October 25, against market expectations of an increase to 230K, from the upwardly revised 228K in the previous week (227K initially reported).

    In Japan, BoJ’s Governour, Kazuo Ueda gave a fresh boost to the Yen earlier today. The bank kept interest rates unchanged but Ueda reiterated its commitment to normalizing monetary policy, hinting at a rate hike in December.

    From a technical perspective, the pair remains moving within a horizontal range with investors awaiting Friday's NFP data.  Immediate support at 151.65. Below here, the next support is 150.60. Resistances are the previous support, at 152.77, and October’s peak, at 153.85.
     

    Japanese Yen FAQs

    The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.

    One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.

    Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.

    The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.

     

  • 31.10.2024 10:24
    USD/JPY hits new lows below 152.00 following a hawkishly-tilted Ueda
    • The Yen trims losses after Ueda hinted at further monetary tightening.
    • US PCE Prices Index and Friday's NFP report will set the Dollar's direction.
    • USD/JPY is approaching an important support area above 151,65.


    The Dollar has extended its pullback against a somewhat stronger Yen on Thursday as the Bank of Japan Governour, Kazuo Ueda hinted at a further interest rate hike “if conditions are met”.

    The BoJ maintained its benchmark interest rate at 0.25%, as widely expected, but Ueda reiterated that the Bank remains committed to normalizing its monetary policy. The Yen appreciated across the board following the press release.

    US data will set the Dollar's near-term direction

    The focus today is on the US PCE Prices Index release, which is expected to show that inflation continued easing towards the Fed’s 2% target rate.

    The highlight of the week, however, will be Friday’s Nonfarm Payrolls. The market consensus anticipates a significant decline although the strong ADP has improved market expectations.

    The pair is now approaching the support area above 151.65. Below here, the next support is 150.60. Resistances are the previous support, at 152.77 and October’s peak, at 153.85. 
     

    Bank of Japan FAQs

    The Bank of Japan (BoJ) is the Japanese central bank, which sets monetary policy in the country. Its mandate is to issue banknotes and carry out currency and monetary control to ensure price stability, which means an inflation target of around 2%.

    The Bank of Japan embarked in an ultra-loose monetary policy in 2013 in order to stimulate the economy and fuel inflation amid a low-inflationary environment. The bank’s policy is based on Quantitative and Qualitative Easing (QQE), or printing notes to buy assets such as government or corporate bonds to provide liquidity. In 2016, the bank doubled down on its strategy and further loosened policy by first introducing negative interest rates and then directly controlling the yield of its 10-year government bonds. In March 2024, the BoJ lifted interest rates, effectively retreating from the ultra-loose monetary policy stance.

    The Bank’s massive stimulus caused the Yen to depreciate against its main currency peers. This process exacerbated in 2022 and 2023 due to an increasing policy divergence between the Bank of Japan and other main central banks, which opted to increase interest rates sharply to fight decades-high levels of inflation. The BoJ’s policy led to a widening differential with other currencies, dragging down the value of the Yen. This trend partly reversed in 2024, when the BoJ decided to abandon its ultra-loose policy stance.

    A weaker Yen and the spike in global energy prices led to an increase in Japanese inflation, which exceeded the BoJ’s 2% target. The prospect of rising salaries in the country – a key element fuelling inflation – also contributed to the move.

     

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