USDJPY – Surviving the Double Bottom

USDJPY – Surviving the Double Bottom

Chart Of The Day

USDJPY came close but held the double bottom low of 107.31 in New York trade today. As we noted earlier, the pair was driven lower by a combination of stop running, risk aversion flows and some market uncertainty about Governor Kuroda’s reappointment.

Earlier in the day, Japanese PM Abe stated that he has yet to decide on the reappointment of Mr, Kuroda and that lack of confidence along with a turn in the Nikkei could have contributed to the fall in USDJPY that dragged the pair to fresh six month lows.

Mr, Kuroda is the principal architect of Japan’s reflation policy and is widely respected by market participants. The market is pricing in an 80%-90% chance of a Kuroda reappointment so any hesitation or change of heart by Mr. Abe is sure to cause further turmoil in USDJPY.

For now, the selling flows appear to have ceased and if the pair can climb above the 108.50 level it will likely have put in a solid double bottom at that level. However, a break of 107.00 shows no support until 105.50 so a slide below those key levels could precipitate an avalanche of selling that could quickly push the pair to fresh yearly lows.

Today’s Trades 02.12.2018 – USDJPY, EURUSD, AUDJPY, USDCAD

Swing

*Good morning/afternoon everyone!*

US equity futures are trading sharply higher this morning thanks to strong gains in Asia and Europe. This stabilization helps currencies find support after last week’s sharp losses. If stocks are able to close in positive territory today, we could see the beginning of a stronger recovery in FX and equities. Although there are no U.S. economic reports scheduled for release, investors are relieved that Congress’ passed a 2 year budget deal that puts a government shutdown behind us. They are also encouraged by reports that the Chinese government may have director shareholders to support the market. A recovery in stocks would drive the Yen crosses higher along with some of the high beta currencies that were beaten down last week. The big question today is whether the equity market recovery can be sustained and if so, USD/JPY could find its way back up to 109.00.

*The MAIN THEMES I see today are*

+USD
+EUR
+AUD
+CAD

*Trading Biases*

+USD, +EUR, +AUD, CAD
-JPY, -CHF
mildly -NZD
neutral GBP

*Today’s Initial Trades*

1. Buy EURUSD at 1.2269, Stop at 1.2241, Target 1.2297
2. Buy AUDJPY at 85.07, Stop at .84.79 Target 85.35
3. Sell USDCAD at 1.2565, Stop at 1.2593, Target 1.2537
4. Buy USDJPY at 108.63, Stop at 108.35, Target 108.91

Close ALL open day trades by 10:20AM NY / 15:20 GMT

USDJPY – Double Bottom?

USDJPY – Double Bottom?

Chart Of The Day

The dollar has been a punching bag for the better part of three months, and just as it appears to have stabilized against other majors, it has yet to find firm footing against the yen. Today’s bout of risk aversion is not helping matters as USDJPY continues to hover below the key 109.00 level.

Tomorrow, however, the market will hear from the FOMC, and while no major policy change is expected a hawkish statement that reaffirms commitment to at least 3 rate hikes in 2018 would go a long way to helping the beleaguered dollar bulls. If USDJPY can clear the 109.50 barrier in the aftermath of the statement, it will have set a higher low double bottom and will have the foundation to rally further.

Today’s Trades 01.30.2018 – USDJPY, EURCAD, EURGBP, AUDJPY

Swing

*Good morning/afternoon everyone!*

If the price action in the FX market on Monday can be characterized by consolidation, the last 12 hours is best described by the word volatility. The dollar rallied hard during the Asian trading session into Europe but collapsed sharply after the London open. It is trading heavily as the NY session begins but trying to recover its losses as pairs like EUR/USD appear to be topping while USDJPY and USDCAD appear to be bottoming. There’s been zero fundamental catalyst but for the past few weeks its lived up to its title of Turnaround Tuesday. We’re also nearing the end of the month and after some very strong moves in currencies, portfolio rebalancing could be affecting FX trade. Eurozone data was mostly in line with expectations with the EZ economy expanding by 0.6% in Q4. UK mortgage data was slightly weaker. Consumer confidence and house prices are scheduled for release this morning but the main focus will be this evening’s State of the Union Address by President Trump -- traders may look to unwind positions ahead of this big event.

*The MAIN THEMES I see today are*

+GBP
+USD
-AUD
-CAD

*Trading Biases*

+USD, +GBP
-AUD, -CAD, -NZD
mildly +EUR, +JPY (+USDJPY)
neutral CHF

*Today’s Initial Trades*

1. Sell AUDJPY at 87.98, Stop at 88.26, Target 87.70
2. Sell EURGBP at .8803, Stop at .8831, Target .8875
3. Buy USDJPY at 108.64, Stop at 108.37, Target 108.92
4. Sell AUDJPY at 87.98, Stop at 88.26, Target 87.70

Close ALL open day trades by 10:20AM NY / 15:20 GMT

USDJPY – Heading to 110.00?

USDJPY – Heading to 110.00?

Chart Of The Day

USDJPY cannot hold its gains. Despite a dovish BOJ, despite a budget deal in DC, despite US yields trading well above the 2.50% on the benchmark 10 year, the pair remains in sell the rally mode.

As we noted this morning,”The FX markets remain skeptical about Fed’s gradual tightening program given the persistent state of turmoil in DC and the prospect of further trade tensions between the US and the rest of the world. NAFTA talks begin today and they will be seen not only as a barometer of trade relations in North America but as a harbinger of US trade policy going forward. Yesterday’s tariffs against solar panels and washing machines may have been the first salvo in the Trump administration’s war on trade and the FX market appears to be reflecting the general investor angst over this course of action.”

Tomorrow the market will get a smattering of 2nd tier US housing data, but the focus of the market will be on technicals levels. The longer the bears control the field of play, the more likely it will be that 110.00 will be run.

Today’s Trades 12.07.2017 – USDJPY, EURJPY, AUDCAD

Swing

*Good morning/afternoon everyone!*

The U.S. dollar is trading higher against all of the major currencies this morning despite a marginal pullback in U.S. yields. The commodity currencies are the worst performers with CAD extending its slide following yesterday’s Bank of Canada statement. The Australian dollar has slipped on the back of softer trade data. Sterling is the most resilient as investors hope for a Brexit deal. Time is running out for Prime Minister May and the pressure is on for the leader of the UK to strike a deal with the DUP and the EU. With the EU Summit slated for next week, it’s head Brexit negotiator has given Britain 48 hours to agree to a potential deal or risk freezing the talks for the rest of the year. Sterling bulls are optimistic and while we are skeptical of a deal, we see the possibility of GBP recovery today before some selling on Friday. As non-farm payrolls near, USD/JPY comes into play. The pair has found its way back above 112.50 but 113 remains formidable resistance. Jobless claims and the Challenger layoff report are due this morning and while these numbers may only have a limited impact on the greenback, jobs are on everyone’s minds. We expect the dollar to press higher today as other currencies underperform.

*The MAIN THEMES I see today are*

-EUR
+USD
-JPY
-AUD

*Trading Biases*

+USD
-EUR, -CHF, -AUD, -NZD, -JPY
neutral CAD (fundamentally positive but meeting resistance technically)
neutral GBP

*Today’s Initial Trades*

1. Buy EURJPY at market now 132.84, Stop at 132.56, Target 133.12
2. Sell AUDCAD at .9649, Stop at .9677, Target .9621
3. Bought USDJPY at 112.74, Stop 112.47, Target 113.02

Close ALL open day trades by 10:20AM NY / 15:20 GMT

USDJPY – Will the Gap Hold?

USDJPY – Will the Gap Hold?

Chart Of The Day

The dollar was better bid today with USDJPY gapping higher on the week’s open in Asia as currency markets breathed a sigh of relief that the Flynn indictment may not have been as politically damaging to Donald Trump as initially reported. The passage of the tax cut bill by Senate was also viewed as bullish for US growth with benchmark 10-year yield popping to 2.40% in morning European dealing.

But tomorrow we get an insight into how well the US economy is doing. ISM Non-Manufacturing report covers more than 70% of the US economy and is the 2nd most important data point for investors after the NFPs.

The market is looking for a modest pullback on the headline, but the true interest of traders will the employment component which tends to be the single best forecaster of the job report and the price paid component which could an early hint that inflationary pressures are finally making their way through the economy.

If ISM beats to the upside it could unleash a rally in rates, and USDJPY could head towards 114.00 as all systems will signal go for US growth.

Today’s Trades 11.30.2017 – CHFJPY, AUDCAD, AUDCHF

Swing

*Good morning/afternoon everyone!*

The U.S. dollar may be trading higher against most of the major currencies this morning but the rally is getting overextended and is running up against key resistance. The big news that we expected this week from the Senate is on tax reform and so far, they have voted to advance the bill in the Senate Budget Committee and to proceed with debates. Now the focus is on the final vote which is expected to happen late Thursday or Friday. There are still a host of lawmakers who haven’t said they will back the final bill so it remains to be seen how quickly they will be able to pass it as the vote is still too close to call.
This morning’s U.S. economic reports from personal income, spending to Chicago PMI are expected to be more negative than positive for the greenback. The euro on the other hand appears to be finding support above 1.18 thanks to stronger than expected German labor data. Sterling extended its gains on reports that an agreement on the Irish border is near. The OPEC meeting dominates CAD flows today while AUD and NZD are trying to find a near term bottom.

*The MAIN THEMES I see today are*

-USD
-CHF
+AUD
+CAD

*Trading Biases*

-USD, -CHF,
+AUD, +CAD, +JPY
mildly +NZD, +EUR, +GBP

*Today’s Initial Trades*

1. Sell CHFJPY at market now 113.88, Stop at 114.16, Target 113.60
2. Buy AUDCHF at market now .7464, Stop at .7436, Target .7492
3. Sell AUDCAD at .9753, Stop at .9781, Target .9735
4. Sell USDJPY at 112.31, Stop at 112.59, Target 112.03

Close ALL open day trades by 10:20AM NY / 15:20 GMT

Today’s Trades 11.27.2017 – USDJPY, EURGBP, EURCAD, AUDCAD

Swing

*Good morning/afternoon everyone!*

Currencies are off to a slow start this morning but with U.S. traders back from their long weekend holidays and the U.S. Senate poised to vote on tax reform, this should be an active and busy week for the FX market. We also have a confirmation hearing for Powell, a speech by Yellen, the BoE financial stability report and the possibility of Brexit headlines. The greenback is trading slightly lower across the board as yields give up early gains. This weakness softness should continue as long as there are no positive headlines on taxes this morning. New home sales are due for release and while we think the data could be stronger given the rise in existing home sales, the impact on the greenback should be limited. USD/JPY is very weak and a break of 11.00 would target the 110.50 area. The EUR/USD remains bid though 1.1950 could be a tough barrier to crack. Commodity currencies are stronger across the board and this outperformance is likely to continue in the NY session.

*The MAIN THEMES I see today are*

-USD
+EUR
+GBP
+CAD
+NZD

*Trading Biases*

-USD
+EUR, +GBP, +CAD, +AUD, +NZD
Neutral CHF

*Today’s Initial Trades*

1. Sell EURGBP at market now .8944, Stop at .8972, Target .8916
2. Sell USDJPY at market now 111.15, Stop 111.43, Target 110.87
3. Sell EURCAD at market now 1.5139, stop at 1.5167, Target 1.5111
4. Buy AUDCAD at .9691, Stop at .9663, Target .9719

Close ALL open day trades by 10:20AM NY / 15:20 GMT

Today’s Day Trades 11.22.2017 – USDJPY, CADCHF, CHFJPY

Swing

*Good morning/afternoon everyone!*

The minutes from the most recent FOMC meeting are due for release today and the U.S. dollar is trading lower across the board despite the prospect of hawkish rhetoric. U.S. yields are also up which should be supportive of the greenback but the mighty buck decoupled from rates after Fed Chair Janet Yellen warned against tightening too quickly in her speech last night. Jobless claims, durable goods orders and revisions to the latest University of Michigan Sentiment index are also due for release but the main event will be the FOMC minutes and U.K. Chancellor Hammond’s Autumn budget. Sterling could be sensitive to the latest economic forecasts from OBR and any significant announcements made by the Chancellor. The euro is holding its ground above 1.17, AUD and NZD are attempting to bottom but the moves look fleeting. USD/CAD is below the 20-day SMA, signaling the possibility of further losses.

*The MAIN THEMES I see today are*

-EUR
-GBP
+USD
-JPY
+CAD

*Trading Biases*

-EUR, -GBP, -JPY, -CHF
+USD, +CAD
mildly +AUD, -NZD

*Today’s Initial Trades*

1. Buy CADCHF at .7759, Stop .7731, Target .7787
2. Buy CHFJPY at 113.36, Stop at 113.08, Target 113.64
3. Buy USDJPY at market 112.06, Stop 111.78, Target 112.34

Close ALL open day trades by 10:20AM NY / 15:20 GMT

USDJPY Back to 112.00?

USDJPY Back to 112.00?

Chart Of The Day

Despite rising equity markets, steady yields, positive economic data and the prospect of a Fed rate hike in December USDJPY has done nothing but slide lower over the past few weeks. What gives?

The problem for the pair is that the market remains skeptical about any further rate hikes in 2018. For now, the Fed funds futures curve is decidedly flat for 2018, with most traders concerned that the Fed will remain on the sidelines far into 2018 amidst the absence of any inflationary pressures.

A few weeks ago we noted that USDJPY has decoupled from many of its correlations including those with bonds and equities. That generally suggests further trouble for the currency as traders ignore the past beneficial relationships and only focus on possible risks. Tomorrow the market will get a glimpse of FOMC minutes which could send the pair lower if they do not offer an unambiguously hawkish message. For now, the 111.50 support remains key -- but a break there could usher in a tidal wave of selling all the way to 110.00

USDJPY – How Far Will it Fall?

USDJPY – How Far Will it Fall?

Chart Of The Day

USDJPY – How Far Will it Fall?

Over the past few weeks, the U.S. dollar has struggled despite progress on tax reform and the prospect of a Federal Reserve rate hike next month. The market may be convinced that the Federal Reserve will raise interest rates in December, but the most recent economic reports have been far from encouraging. At the same time, while the House voted to pass its tax bill this past week, the Senate is where the real battle will take place. The full Senate is not expected to vote on the bill until after the Thanksgiving holiday so there may be little reason for investors to be long dollars during the holiday week. Last minute changes that tie in the Affordable Care Act and make individual tax cuts temporary (corporate tax cuts permanent) have not been received well by Democrats and even some Republicans. The GOP cannot afford to lose more than 2 votes. They have only a 52-48 majority in the Senate and no Democrats are willing to support the bill. Also, the Senate and House still have to reconcile their bills before they are combined into a final plan that is voted on by both houses of Congress. So it will still be a long road ahead before President Trump signs tax reform into law. With the Senate going on recess, we probably won’t get any meaningful progress in the week ahead and that could contain the volatility in the greenback. Aside from the FOMC minutes, which should be dollar positive, there are no major U.S. economic reports scheduled for release.

Technically USDJPY has a lot of support between 111.70 (the 100-day and 200-day SMA cross) and 111.90, the 38.2% Fibonacci retracement of the September to November rally. A move down to that level could be all that we see next week but if this support level is broken, the next stop could be 111.00.