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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.