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USDJPY – Will 105.00 Hold?
Boosted by surging yields on the 10 year USDJPY barreled through the psychologically key 105.00 level today, rising to a high of 105.35. This was its best performance in three months and the pair looks like it’s ready for a breakout especially if US yields continue to move up. The ten year is only 15 basis points away from the key 2.00% level which would mark a major milestone.
But before the dollar rally can continue unabated the market faces the US GDP figures tomorrow and there is reason to believe that the number may miss the mark. The market is looking for a bump to 2.5% growth from the anemic 1.4% the quarter prior, but Retail Sales soft and with Durable Goods missing estimates as well chances are that the GDP could come in at 2.3% or even lower.
A big miss on the GDP could once again sow doubts about Fed’s policy action in December and USDJPY could quickly tumble off its highs with nearest support now at the 103.00 figure.