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USDJPY has turned into a nightmare for the dollar bulls. Despite decent US GDP data, the pair failed to hold the day’s highs and worse sold off below the 112.00 figure as the day progressed. US rates were well bid, but the pair instead chose to take it cues from the equity market which sold off hard dropping by more than 1% my midday New York trading.
The flame out does not bode well for USDJPY and suggests that investors are beginning to doubt that the Fed will hike rates anytime this year. Inflation remains subdued while growth is still lackluster. So far this month the market has seen nothing but economic disappointment from US data and that is likely to keep downward pressure on the unit for the foreseeable future.
With no major data on the docket tomorrow and a long weekend holiday coming up, the pair could continue to sell off into the close of the week with 111.00 the next target of the shorts.