USDJPY – Once More to 110.00?

USDJPY – Once More to 110.00?

Chart Of The Day

Last week’s tepid US CPI readings and the weak NFP readings the week before that have cooled traders expectations of Fed rate hikes going forward with the market essentially pricing in the prospect of only 3 hikes this year.

Fed officials, however, continue to assume a hawkish stance with Cleveland President Mester reaffirming the view that inflation may go above the 2% range. So far the Fed analysis has been far too optimistic core CPI readings did push through the 2% ceiling last month – but only just – marking only the second time this year that the core readings have risen above the 2% level.

Part of the reason for muted inflation readings is the woefully slow gains in average hourly earnings. Given the tax cut, the stimulatory aspect of fiscal policy and the relative tightness of the labor market, economists expected nominal wages to rise between 3.5%-4.0% by now, yet the gains have only been 2.6% creating very little real wage growth for the US consumer.

Tomorrow’s US Retail Sales will provide the most important view of the state of US final demand. The market is anticipating a rebound in US Retail Sales of 0.5% from 0.2% the month prior. If Retail Sales improve USDJPY will make another run at 110.00, but if the number misses its mark once again and shows a paltry growth of 0.2% or worse, the Fed futures market will start to pare its bets regardless of what the Fed officials will say as evidence will continue to mount that case for further tightening is simply not there.

USDJPY – Going for 110.00?

USDJPY – Going for 110.00?

Chart Of The Day

Despite less than stellar US data, USDJPY shrugged off concerns over slowdown and plowed ahead as the bulls have 110.00 firmly in view. Tomorrow the market will get a look at ADP and FOMC statement and as long as jobs print at 175K or better and the Fed reaffirms its hawkish stance the markets are likely to test the ket resistance within the next few days.

Although US economy shows some signs of a slowdown, it remains well in expansionary territory and its monetary policy continues to be the most restrictive in the G-11 universe and that above all else is keeping USDJPY propped up for the time being.

Will USD/JPY Hit 110? Not so Fast.

Will USD/JPY Hit 110? Not so Fast.

Chart Of The Day

Will USD/JPY Hit 110? Not so Fast.

After rising for 6 days straight, USD/JPY finally consolidated today above 109. The decline in Treasury yields prevented USD/JPY from rising but U.S. data was better than expected with jobless claims falling to its lowest level in 49 years. Durable goods orders also rose 2.6%, against expectations for 1.6% increase while the trade deficit shrank to -$68B from -$75.9B. There are 2 event risks in the next 24 hours that will affect how USD/JPY trades. Tonight, the Bank of Japan has a monetary policy announcement. The BoJ firmly believes in the need for easy monetary policy so no changes are expected but they will be releasing their latest economic projections including their first forecasts for 2020. Tomorrow, first quarter U.S. GDP numbers are scheduled for release and while investors are positioning for a strong report, the drop in non-defense capital goods orders, the stagnation in durable goods ex transportation, weakness in retail sales at the start of the year points to a softer release. Therefore if GDP falls short of expectations, we could see end of week profit taking in the greenback.

Technically, USD/JPY has broken above the 100-day SMA and 50% Fibonacci retracement of June to December 2016 rally. However as shown in the chart, the rally stopped right at the 100-week SMA near 109.50. This is a significant resistance level that USD/JPY needs to break in order to make a run for 110. If it fails here, support is at 108.75 and a break below that level could see the pair slip all the day down to 108.

Today’s Trades 04.12.2018 – GBPUSD, USDJPY, USDCAD

Swing

*Good morning/afternoon everyone!*

The currency markets are eyeing geopolitical risks this morning as President Trump says an attack on Syria could happen very soon, or “not at all.” While this creates more confusion than clarity, investors are relieved that an announcement wasn’t made overnight. By hitting Syria, the President is taunting Russia and the greatest implication aside from military engagement, U.S. dollar weakness and risk aversion is higher oil prices. USD/CAD remains under pressure was investors eye the headlines for updates on Trump’s decision. Softer Eurozone industrial production makes the euro the weakest performing currency this morning. Sterling came back strongly after dropping below 1.4150. USD/JPY has moved to the top of its recent range on the back of higher bond yields and Dow futures, which are pointing to a positive open. AUD is flat while NZD continues to outperform. There are no major U.S. economic reports scheduled for release today so keep on the headlines and stocks.

*The MAIN THEMES I see today are*

+GBP
+CAD
+NZD
-EUR
-USD (but +USDJPY)

*Trading Biases*

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

*Today’s Initial Trades*

Here’s the summary --

1. Sell USDCAD at 1.2594, stop at 1.2623, Target 1.2563
2. Buy USDJPY at 107.13, Stop at 106.85, Target 107.41
3. Buy GBPUSD at 1.4185, stop at 1.4157, Target 1.4213

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

Today’s Trades 04.11.2018 – EURGBP, USDJPY, GBPUSD, USDCAD

Swing

*Good morning/afternoon everyone!*

The U.S. dollar is trading lower against all of the major currencies this morning as investors wait for the next shoe to drop. With President Trump set to announce a response to the chemical attacks in Syria, ongoing trade tensions, the NAFTA meeting and the investigations in Russia / Trump’s lawyer, there’s significant headline risk today. U.S. CPI is expected to tip higher given stronger PPI and gas prices but the impact on the greenback may be limited. The FOMC minutes are also due later this afternoon. The best performing currencies this morning are the euro and Japanese Yen. Mario Draghi is speaking but so far there hasn’t been any significant headlines. We are also seeing some profit taking in the commodity currencies as European equities sell off and Dow futures point to a lower open. Global bond yields are down across the board which is adding pressure on USD, EUR and GBP.

*The MAIN THEMES I see today are*

-GBP
-CAD
+EUR
-JPY

*Trading Biases*

+EUR, +CHF
-GBP, -CAD, -JPY, -AUD
mildly -NZD, -USD (trend is down but data could prop the buck)

*Today’s Initial Trades*

Here’s the summary --

1. Buy EURGBP at .8720, stop at .8692, Target .8748
2. Buy USDCAD at 1.2612, Stop at 12584, Target 1.2640
3. Sell USDJPY at 106.90, Stop at 107.18, Target 106.62
4. Sell GBPUSD at 1.4189, Stop at 1.4217, Target 1.4161

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

*Good morning/afternoon everyone!*

The U.S. dollar is trading lower against all of the major currencies this morning as investors wait for the next shoe to drop. With President Trump set to announce a response to the chemical attacks in Syria, ongoing trade tensions, the NAFTA meeting and the investigations in Russia / Trump’s lawyer, there’s significant headline risk today. U.S. CPI is expected to tip higher given stronger PPI and gas prices but the impact on the greenback may be limited. The FOMC minutes are also due later this afternoon. The best performing currencies this morning are the euro and Japanese Yen. Mario Draghi is speaking but so far there hasn’t been any significant headlines. We are also seeing some profit taking in the commodity currencies as European equities sell off and Dow futures point to a lower open. Global bond yields are down across the board which is adding pressure on USD, EUR and GBP.

*The MAIN THEMES I see today are*

-GBP
-CAD
+EUR
-JPY

*Trading Biases*

+EUR, +CHF
-GBP, -CAD, -JPY, -AUD
mildly -NZD, -USD (trend is down but data could prop the buck)

*Today’s Initial Trades*

Here’s the summary --

1. Buy EURGBP at .8720, stop at .8692, Target .8748
2. Buy USDCAD at 1.2612, Stop at 12584, Target 1.2640
3. Sell USDJPY at 106.90, Stop at 107.18, Target 106.62
4. Sell GBPUSD at 1.4189, Stop at 1.4217, Target 1.4161

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

USDJPY – Ready for 108.00?

USDJPY – Ready for 108.00?

Chart Of The Day

After having everything but the kitchen sink thrown at it over the past few days USDJPY has managed to withhold the risk aversion flows and trade above the 107.00 level by end of trade today. The never-ending political chaos in Washington DC no longer seems to have much impact on the pair as the friction over the trade tensions with China eased with President’s Xi’s conciliatory speech and President Trump’s never-ending legal problems are now ignored by the market. There is still risk that Trump could bomb Syria in response to the chemical gas attack, but unless that action is followed by expansion of military activities the market may ignore it as well.

Meanwhile, on the economic front, there is a lot o like for dollar bulls. Today’s hotter than expected PPI numbers suggest that CPI could rise as well, further solidifying the case for another Fed rate hike and tomorrow’s release of FOMC minutes is likely to confirm that the Fed will maintain its tightening bias.

Technically the USDJPY pair has made a solid inverted head and shoulders bottom and now looks like its ready to challenge the 108.00 figure if data proves supportive.

Today’s Trades 04.10.2018 – USDJPY, USDCAD, AUDUSD

Swing

*Good morning/afternoon everyone!*

It was no surprise that Chinese President Xi took the high road by refraining from escalating trade tensions with the U.S. during his speech last night. Instead he stressed China’s willingness to cooperate by saying they could lower trade tariffs on autos and tighten enforcement on intellectual property rights. In return, USD/JPY bounced back above 107 and risk currencies traded higher across the board led by gains in AUD and NZD. The U.S. dollar is still underperforming after the FBI raided the offices of Trump’s lawyer, putting the trail one step closer to the President. EUR/USD is testing the 50-day SMA for the second day in a row and and looks set to break it. Sterling is benefitting from positive BoE comments the Canadian dollar is finally moving lower on the prospect of a NAFTA deal. U.S. PPI and Canadian housing starts/permits are the only economic reports on today’s calendar.

*The MAIN THEMES I see today are*

-JPY
+CAD
+AUD
+EUR
+NZD
+USDJPY

*Trading Biases*

+EUR, +CAD, +AUD, +NZD
-JPY, -USD (except vs. USDJPY)
neutral CHF, GBP

*Today’s Initial Trades*

Here’s the summary --

1. Buy USDJPY at 107.07, Stop at 106.79, Target 107.35
2. Sell USDCAD at 1.2677, Stop at 1.2705, Target 1.2649
3. Buy AUDUSD at .7740, Stop at .7712, Target .7768

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

Today’s Trades 04.09.2018 – GBPCHF, USDJPY, USDCHF, EURNZD

Swing

*Good morning/afternoon everyone!*

We’re starting the new trading week with stability. U.S. stock futures are pointing to a positive open after selling off sharply on Friday thanks in part to the recovery in Asian and European equities. Treasury yields are also pointing higher, supporting the rally in the greenback. The dollar is up against most of the major currencies with the exception of sterling and the New Zealand dollar. Investors still believe or at least hope that trade tensions between the U.S. and China amounts to nothing more than posturing as no sanctions have gone in effect and so far there hasn’t been further antagonism from China. The euro is under pressure from softer German trade data while the New Zealand dollar is benefitting from AUD/NZD, which has fallen to a 1 year low. Sterling on the other hand is up thanks to stronger house prices and a rise in Gilt yields. Keep an eye on the headlines as geopolitical risks remain the key focus -- we could get a NAFTA deal this week and increased tensions with China.

*The MAIN THEMES I see today are*

+USD
+GBP
-CHF
-EUR
-JPY

*Trading Biases*

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

*Today’s Initial Trades*

Here’s the summary --

1. Buy USDCHF at .9606, Stop at .9578, Target .9634
2. Buy USDJPY at 107.13, Stop at 106.85, target 107.41
3. Buy GBPCHF at 1.3545, Stop at 1.3517, Target 1.3573
4. Sell EURNZD at 1.6843, Stop at 1.6871, Target 1.6815

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

USDJPY – Is the Bottom In?

USDJPY – Is the Bottom In?

Chart Of The Day

USDJPY has been in a three-day selloff driven lower by risk aversion flows, but today the pair has managed to stage a comeback and is closing well above the 106.00 level. The markets appear to have stabilized after yet another wave of Trump rants on twitter and traders will now likely focus on the real business at hand as a series of key US economic reports are about to be released this week.

First on deck will be the ADP data due tomorrow at 8:15 EST and then the ISM Non- Manufacturing. Unless both reports widely miss their mark, they should prove positive for the pair confirming that US economy continues to grow steadily and that the Fed will maintain its rate hike policy for the foreseeable future.

Technically, USDJPY has made inverse head and shoulders bottom, which tends to be a very robust bottoming pattern and looks ready to make another run at the 107.00 figure.

USDJPY – 106.00 in View?

USDJPY – 106.00 in View?

Chart Of The Day

Second day in a row that USDJPY is up as risk assets continue to rise but yields remain depressed. The pair has been so grossly oversold that some sort of rebound was due but for now the 106.00 figure remains formidable resistance.

Tomorrow the market will get a look at the final revision of US GDP which is expected to come in at 2.7% versus 2.5% original forecast. If the number meets or better yet rises towards the 3.0% level the upside in USDJPY could be substantial. Faster than expected growth in Q4 would suggest that 2018 growth could approach 3% and therefore push US 10 year yields above the key 3% mark. All of that would be positive for USDJPY and the pair could run as high as 107.00 as short covering flows kick in.

Today’s Trades 03.26.2018 – EURUSD, USDCAD, USDJPY

Swing

*Good morning/afternoon everyone!*

Most of the major currency pairs are trading higher this morning as an initial sell-off in Asia turned into gains for Japanese and HK equities. European stocks are also in positive territory as Dow futures point to a sharply higher open. Investors are relieved that Friday’s sharp sell-off did not turn into additional losses for currencies & equities and this strength could carry over to the North American session. This is the first day of trade ahead a long weekend for most investors (Easter Holiday). The lack of major economic reports points to consolidation but political headlines and Japan’s fiscal year end could affect FX trade. With that in mind, yields are up across the board, supporting the idea of a further risk rally. The good news is that US and Korea have reached an agreement that exempts S. Korea from steel tariffs. The U.S. and China were also in talks over the weekend that could ease trade war fears. The New Zealand dollar is the best performer, rising strongly on the back of an unexpected trade surplus while the Canadian dollar lags behind.

*The MAIN THEMES I see today are*

+EUR
-CAD
+AUD
+NZD

*Trading Biases*

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

*Today’s Initial Trades*

Here’s the summary --

1. Buy USDCAD at 1.2876, Stop at 1.2848, Target 1.2904
2. Buy USDJPY at 105.12, Stop at 104.84, Target 105.40
3. Buy EURUSD at 1.2415, Stop at 1.2387, Target 1.2443

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

USDJPY – Is the Bottom In?

USDJPY – Is the Bottom In?

Chart Of The Day

Despite OECD leading interest rate, the dollar can’t get any respect. Nowhere is this more evident than in the USDJPY which continues to make yearly lows just as the interest differential is hitting decade-long highs. Part of the problem is the wave of risk aversion that has swept the market as fears of a trade war hang heavily over the buck.

Today, however, the market may have received some good news. US Congress is likely to pass the omnibus funding bill removing the specter of a budget standoff in DC. With government functioning smoothly, attention will turn back to trade, but even here the fears may have been overblown. Although the Trump administration threatened the world with tariffs on steel and aluminum it appears that most of our trading partners will get waivers.

In the meantime, the war with China looks to be highly tactical as well. Although the scope of proposed tariffs is vast at $50 Billion, it not yet clear just how much damage they will do to Chinese producers and China -- which always plays the long game -- may choose to complain, but do little in response, as their desire for trade my trump political considerations. If the Chinese do indeed hold back their gunpowder, the market may see a massive relief rally and USDJPY which has been able to hold 105.00 support despite all the hand-wringing by traders, could quickly verticalize to 108.00 as shorts run for cover.