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.

USDJPY – Back to 108.00?

USDJPY – Back to 108.00?

Chart Of The Day

In his first testimony in front of Congress, Jerome Powell handles himself with aplomb, proving to be able stewart of the US monetary policy while handling the often inane questions from politicians with admirable restraint.

Although Mr. Powell offered no new insights into US monetary policy, he did state that he thought that the US economy has strengthened. That’s important because it suggests that Fed intends to follow its target of three rate hikes this year. Unlike Ms. Yellen, Mr. Powell appears to be more determined to normalize policy and less affected by day to day data to take him off the course.

Such perceptible increase in hawkishness is likely to make its way felt in the fixed income market with US yields rising back above the 2.90% level. If bond yields move back to recent highs of 2.94%, USDJPY which has been consolidating for the past few weeks, may finally break above the 108.00 level for good and begin to rise towards the key 110.00 level.

USDJPY – Are We Headed to 108.00

USDJPY – Are We Headed to 108.00

Chart Of The Day

Today’s PPI data came in weak at 1.9% versus 2.2% eyed suggesting that there are absolutely no price pressures in the US economy and making the prospect of another Fed hike appear remote. The news weighed on USDJPY and pushed the pair below the key 109.50 support level creating fresh technical damage to the chart.

Tomorrow’s CPI data could also miss its mark and add further downside pressure to the pair as US benchmark 10-year yields drift towards the 2% level. Inflation – or rather the absolute absence of it – remains the key barrier to any further tightening by the Fed and is the primary reason for dollars doleful performance. If the CPI numbers tomorrow miss the pair may be headed to long term support at the 108.00 level