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Unraveling Dollar Yen's Trading MazeHey there, traders! 🌟 Let's delve into the tricky landscape of dollar yen – a setup that demands our attention. The overarching trend suggests a bullish journey, but buckle up, because there are twists ahead. 📈 News flashes about the potential Bank of Japan (BOJ) intervention and the recent wastewater stir have stirred the pot. 🌊⚖️ For the conservative trader, a week of observation might be prudent. But for those risk-savvy, why not seize the day? When big news lurks, colossal movement follows, and with the right risk management, why not chase those opportunities? 💼💰 Gazing at the weekly chart, we spot a retest at the previous high – a pivotal zone for the week. The tantalizing prospect of a break and close above this high tantalizes for a continued rally. But guess what? Immediate resistance lurks nearby. 🛑📊 In the grand scheme, to sustain a bullish trajectory, the magic number is 152.02 on the weekly chart. 🚀 Shifting to daily charts, the high gets retested with a sly RSI divergence – a whisper of counter trend play, perhaps? Now, for the four-hour setup, a familiar pattern – retest, RSI divergence – all hinting at an intriguing possibility. And guess what? The one-hour chart mirrors this with its own RSI divergence dance. 🎭📉 For the curious minds eager to learn trading nuances. Now, let's revisit our trusty weekly chart and unfurl our analysis on Dollar Yen. A bearish bat pattern beckons a shorting venture at 149.40. Daily chart enthusiasts, the confirmation for crab pattern enthusiasts swings by at 150.45. Are you eyeing a buy? Retest the immediate support at 144.65 for a potential entrance. Zooming into the four-hour chart, ABCD pattern aficionados can keep an eye on 147.79 for counter trading maneuvers. Buying prospects? 144.62 or 144.02 could be your calling. Remember, when the market respects these levels and avoids sinking further, it signals the support's sturdy stance. 🏗️ And oh, the sweet RSI divergence on the one-hour chart – a touch of icing on our trading cake. Once 146.55 gets a respectful tap, I'll be diving into an aggressive counter trade. 🚀
Short
by RaynLim
6
USD/JPY breaks above 146, Tokyo Core CPI dips to 2.8%USD/JPY has posted small gains on Friday, enough to push above the symbolic 146 line. On the data calendar, Tokyo Core CPI dipped lower and Fed Chair Powell addresses the Jackson Hole Symposium later today. Japan released the Tokyo Core CPI earlier today. This is the first inflation release of the month, making it a key event. In August, Tokyo Core CPI rose 2.8% y/y, down from 3.0% in July and just under the consensus estimate of 2.9%. Despite the drop in inflation, the indicator has remained above the Bank of Japan's 2% target for some fifteen months. Earlier in the month, the so-called "core-core index", which excludes fresh food and energy, remained at 4.0%. This points to broad inflationary pressure and raises questions about the BoJ's insistence that inflation is transient. The BoJ has said it will not exit its ultra-loose monetary policy until wage growth rises enough to keep inflation sustainable around 2%. Still, the markets have been burned before by the BoJ making unexpected moves and are on guard for the BoJ tightening policy, especially with the yen at very low levels. The markets are keeping a close eye on the Jackson Hole symposium, with Fed Chair Powell and BoJ Governor Ueda both attending. Powell delivers a key speech on Friday and Ueda will participate in a panel discussion on Saturday. If either one provides insights into future rate policy, it could mean some volatility from USD/JPY on Monday. What does the Fed have planned? That depends on which Fed member is addressing the media. Philadelphia Fed President Patrick Harker said on Thursday that he didn't see a need to raise rates further, absent any unexpectedly poor data, but added that the Fed wouldn't be lowering rates anytime soon.  However, Boston Fed President Susan Collins said that rate increases might still be necessary. The Fed is likely to pause at the September meeting, but what happens after that is unclear. USD/JPY is facing resistance at 146.41, followed by 147.44 There is support at 145.54 and 144.51
by OANDA
Inflation Wears Out Its Welcome in JapanHas anybody ever told you to be careful what you wish for because you might get it? Well, the Bank of Japan appears to be in one of those situations today. Japan spent three decades oscillating into and out of deflation. As such, when inflation started to rise in 2022, the BOJ was initially thrilled. Finally deflation was coming to an end, and inflation was heading up to a target of 2.5%. The problem is that inflation didn’t stop heading higher at 2.5%. It’s now up to 4.2% excluding fresh food and energy. In a nation with a large elderly population where many people are on fixed incomes, having inflation too high is just as bad has having it too low. But why should the rest of the world care what happens to Japan’s inflation rate? For starters, Japan has the world’s fourth largest economy, and what happens to the yen and to Japanese bond yields is of worldwide consequence. Beginning in 2012, the BoJ launched a mega quantitative easing program – four times bigger than what the Federal Reserve did relative to the respective size of their economy. This QE program sent the yen plunging as the BoJ also capped 10-year Japanese government bond yields. But recently, they have softened the cap, sending not only Japanese bond yields higher but raising the cost of long-term borrowings all around the world, including in the United States and Europe. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com By Erik Norland, Executive Director and Senior Economist, CME Group *Various CME Group affiliates are regulated entities with corresponding obligations and rights pursuant to financial services regulations in a number of jurisdictions. Further details of CME Group's regulatory status and full disclaimer of liability in accordance with applicable law are available below. **All examples in this report are hypothetical interpretations of situations and are used for explanation purposes only. The views in this report reflect solely those of the author and not necessarily those of CME Group or its affiliated institutions. This report and the information herein should not be considered investment advice or the results of actual market experience.
TVC:JP10YEducation
by CME_Group
USD/JPY punches above 146, BoJ inflation nextThe Japanese yen has posted significant losses on Monday. USD/JPY is trading at 146.23 in the North American session, up 0.57% on the day. The US dollar has looked sharp and is within a whisker of pushing the yen below the 146 line, as was the case last week when the strong US dollar pushed the ailing yen to a nine-month low. The Japanese economy was once synonymous with deflation, but that has changed in the era of high global inflation. Japan's inflation is slightly above 3%, a level that other major central banks would take in a heartbeat. Still, inflation is relatively high by Japanese standards and both headline and core inflation have persistently been above the Bank of Japan's 2% target. Japan's inflation reports are carefully monitored as higher inflation has raised speculation that the BoJ will have to tighten its loose policy. The central bank has insisted that high inflation is transient, but the BoJ wouldn't be the first bank to make that claim and then backtrack with its tail between its legs. Remember the Fed and the ECB? Last week, July's CPI remained unchanged at 3.3% y/y. Core CPI dropped to 3.1% y/y, down from 3.3%. On Tuesday, Japan releases BoJ Core CPI, the central bank's preferred inflation gauge, which is expected to dip to 2.7% in July, down from 3.0% in June. China's economic troubles have sent the Chinese yuan sharply lower, with the Chinese currency falling about 5% this year against the US dollar. A weak yuan makes Chinese exports more attractive, but this is at the expense of other exporters including Japan. As a result, there is pressure in Japan to lower the value of the yen in order to compete with Chinese exports. USD/JPY pushed above resistance at 145.54 earlier today. The next resistance line is 146.41 There is support at 144.51 and 143.64
by OANDA
A Twist in the Bullish Trend?Despite the prevailing bullish movement on Dollar Yen, a shift in strategy beckons this week. Embark on this journey with me. On the weekly chart, a slight break and closure above the prior high is evident. The magnitude of this "bit" rests upon your filters – will the subtle breach be overlooked? An RSI divergence, however, raises concern. This divergence surfaces as the market forms a matching or higher high, prompting my consideration for a shorting prospect. ⚖️📊 Transitioning to the daily chart, the market once again surges beyond the previous high. While it fails to breach the previous RSI level, the prolonged nature of this movement merits contemplation. Could these statistics indicate a formidable resistance? Food for thought. 🗞️🤔 The four-hour chart illustrates the market's ascent, setting the stage for a potential shorting opportunity upon a retest at 146.40. Zooming in further to the one-hour chart, a structural standpoint reveals potential trading setups. Amidst this, the buzz about the Bank of Japan's potential market intervention simmers. As a prudent trader, I advise cautiousness, keenly observing the hard facts and policy shifts that could impact the Japanese Yen's trajectory and consequently, Dollar Yen. 🏦🌐 For enthusiasts interested in mastering the art of news-driven trading, scan the QR code to enter our community chat. Verification unlocks access to our filtered news, arming you with valuable insights. 💼🌍 Returning to the weekly chart, trading strategies come into play. A bearish bat pattern at 149.29 piques my interest, a setup I've been highlighting for weeks. The daily chart offers parallel setups, including the aforementioned bearish bat pattern and a bearish crab pattern that could emerge around 150.44. The latter's fate rests upon the strength of the Bank of Japan's intervention and policies. 🦀📈 Within the four-hour chart lies a counter-trend opportunity at 147.76, rooted in the ABCD pattern setup. For trend-oriented traders, a potential buying entry hovers at 144.02 upon retest, drawing support from established levels. However, my focal point remains the one-hour chart, spotlighting a potential shorting opportunity through the shark pattern. Should the market reach 146.30, I envision an enticing entry. As the specter of Bank of Japan intervention looms, my exit strategy might involve one week post-intervention for potential profits, grounded in years of market observation and trading experience. ⏰📈
Short
by RaynLim
USD/JPY - yen gains ground as core inflation slowsThe Japanese yen has extended its gains on Friday. In the North American session, USD/JPY is trading at 145.29, down 0.38%. The month of August has been kind to the US dollar, which has posted strong gains against all of the major currencies. USD/JPY has risen 2.34% in that period and on Thursday, the yen fell as low as 146.56, a nine-month low against the US dollar. The yen has been the worst performer among the majors over the past month, and the currency's sharp depreciation has raised speculation that Tokyo could respond by intervening in the currency markets. Japan's Ministry of Finance (MOF) shocked the markets in September 2022 when it intervened and bought billions of dollars with yen, which propped up the Japanese currency. At that time, the yen was also trading around the 146 level, and that has many investors on edge that the MOF may be planning another intervention. Japan's inflation has been hovering above 3% for a prolonged period, higher than the Bank of Japan's target of 2%. The BoJ has insisted that it will not loosen its ultra-accommodative monetary policy until it sees evidence that inflation is sustainable, such as higher wage growth. The markets are not taking the BoJ at its word, as the BoJ keeps its cards very close to the chest in order to surprise the market when it shifts policy. Clearly, transparency is not high on the BoJ's list, in contrast to the Federal Reserve and other major central banks. Since inflation data could well lead to a shift in policy, every inflation report out of Japan attracts significant attention. The July CPI report, released today, was no exception. Core CPI, which excludes fresh food, eased to 3.1% y/y, matching the consensus estimate and down from 3.3% in June. The indicator is closely watched by the BoJ and the decline supports expectations that the BoJ will maintain its current policy. This, despite the fact that Core CPI has now exceeded the BoJ's 2% inflation target for 16 consecutive months. The BoJ is not expected to make any major shifts to policy in the near-term, but that doesn't necessarily mean that the central bank will stay completely on the sidelines. At the July meeting, the BoJ surprised the markets with a tweak to its policy which provided more flexibility to the 10-year bond yield cap. Governor Ueda insisted that this was not a move towards normalization, but investors have learned the hard way that the BoJ is not hesitant to make policy moves that have blindsided the markets. . USD/JPY Technical USD/JPY is testing support at 145.71. Below, there is support at 144.07 There is resistance at 1.4640 and 147.31
by OANDA
1
Will the BoJ intervene...The USDJPY trades with choppy price action between the 145 and 146 price range. With increasing comments about the weakness of the Yen and the possible invention from the BoJ, the longer the USDJPY stays at this price level, the higher chance we are likely to see an intervention. However, we cannot rule out a continuation of the upside, especially if the DXY recovers in strength. I would avoid further trades to the upside, and wait for possible counter trend reversal. But speculative counter-trends setups have a higher likelihood of failing (the trend is your friend)
Short
by JinDao_Tai
2
USD/JPY rises as BoJ takes note of inflationThe Japanese yen has started the week in negative territory. In the European session, USD/JPY is trading at 142.36, up 0.42%. Inflation continues to be a key issue for the Bank of Japan, although it is much lower than in other major economies, at around 3%. Still, inflation is above the Bank's 2% target and this continues to raise speculation that the BoJ will have to tighten policy sooner or later. The BoJ has pushed back against talk that it will tighten, and when the central bank recently made its yield curve control (YCC) more flexible, Governor Ueda was careful to stress that the step did not represent a move towards normalization. Against this backdrop, the BoJ released its Summary of Opinions earlier today. The members reiterated the necessity to keep an ultra-easy monetary policy in place, but some members noted that inflation and wages could continue to increase. One opinion went as far as to state that 2% inflation "in a sustainable and stable manner seems to have clearly come in sight" and urged the BoJ to make YCC more flexible. This BoJ internal conversation could be a signal that policy makers are slowly acknowledging that inflation, which has been above the 2% target for months, may be sustainable. That would mark a sea change in the BoJ's thinking and could have major ramifications on the exchange rate. The US employment report for July was a mix. Nonfarm payrolls were soft at 187,000, despite a banner ADP release which fuelled expectations of a breakout nonfarm payrolls release. Job growth is slowing, but the unemployment rate ticked lower to 3.5% down from 3.6%, and wage growth stayed steady at 4.4%. After the Fed's July rate hike, what's next? The money markets are expecting the Fed to take a pause at the September meeting, with a probability of 84%, according to the FedWatch. It's entirely possible that the Fed is done with tightening, but that will depend to a large extent on the data, particularly inflation and employment reports. USD/JPY is testing resistance at 142.12. Above, there is resistance at 143.55 141.47 and 140.36 are providing support
by OANDA
GBPJPY: Breakout, Retest, Down...In my recent ideas I’ve noted JPY strength resuming and this is evident in the performance last week, and we can see this when looking at the JPYWCU chart which is like DXY for the Yen. We can see what could be a higher low forming and a fourth retest of the resistance around 0.005350 which could break. We’ve seen out-performance of the Yen against many crosses in the past week, which has generated good pips, it’s too early to suggest a strong recovery (especially as BoJ clearly want a weaker currency to support exports), however they have an economy that when recessions start to hit, I believe they’ll fair better. All crosses against yens are at their high points, this doesn’t mean they can’t go higher, but money flows and I believe the shift is starting. I’m expecting GBP weakness over the coming weeks due to high inflation and massive threat of recession, and definitely this week against the Yen, so looking for shorts around 181.4. First target will be 167 area.
Short
by Finchcliffe
AUDJPY: Bearish on AUD, Bullish on JPYI believe we're going to start seeing a shift in sentiment for the JPY, there were indications last week, we broke a rising trendline, we've retraced and retesting now. Fundamentally the Japanese economy looks stronger, despite the loose monetary policy. We saw in June 2022 that BoJ can chuck curve balls in too, I'm not necessarily expecting that but if it happens I want to be on the right side. I'm bearish on AUD with high inflation and a dovish central bank, there is big news this week, we may see another pause, if that happens then we'll be down to around 90.0 I think before a retracement. I'm looking to get in anywhere from now up to 95.5, and a sell down to just above last week's low (92.0) ahead of the news this week, which could send this one further down, but best to be cautious!
Short
by Finchcliffe
CADJPY: Resuming the uptrendI'm looking to buy again, I don't think we've seen the top, we're still miles off an ATH. With JPY still weak, Oil strong (which gives CAD strength), and a bullish engulfing candle on the 4hr (and a pinbar almost complete) I think we've had a 50% retracement of the last impulse and now back up. It would be great for this 4hr candle to close above the previous with a green candle, but generally signs look like we have upward momentum to me. I'm going to be careful around the previous high (109) and will likely TP to assess the situation, if we fail to break then I think we'll be heading down fast (I'm expecting JPY strength sometime soon)
Long
by Finchcliffe
3
Japanese yen sinks as inflation risesThe US dollar continues to rally as the Japanese yen is down for a fourth straight day. In Friday's European session, USD/JPY is trading at 141.93, up 1.33%. The yen has taken investors on a roller-coaster ride. The Japanese currency surged 2.37% last week against the greenback but has reversed directions and dropped 2.15% this week. Japan’s core inflation (excluding fresh food) ticked higher to 3.3% y/y in June, up from 3.2% in May and matching the consensus estimate. Core core inflation (excluding fresh food & energy) dipped lower to 4.2% y/y, down from 4.3% in May and matching the consensus. The readings indicated that the inflation picture barely changed in June, but that's not really good news for the Bank of Japan. The core CPI has now stayed above the BoJ's 2% target for the 15th straight month. BoJ Governor Ueda has continued the Bank's ultra-loose policy despite high inflation, insisting that inflationary pressures are temporary. This stance, however, is becoming increasingly untenable as inflation has been persistently high and is not showing any signs of falling. Friday's inflation numbers come just a week before the BoJ's meeting, and there is speculation that the central bank could phase out its yield curve control (YCC) policy that has been distorting bond pricing. A change to YCC would almost certainly send the yen sharply higher, which was the case late last year when the BoJ stunned the markets and widened the target band for 10-year government bonds. Earlier this week, Governor Ueda poured cold water on any change in policy, but this could be an effort to scare off speculators looking for a tweak to YCC. It seems more likely than not that the BoJ will maintain policy settings at next week's meeting, but a shift is certainly on the table, especially with the yen floundering near the 142 line. USD/JPY has pushed past resistance at 1.4067 and 141.28. There is weak resistance at 142.12, followed by 142.62 There is support at 139.68 and 138.52
by OANDA
USD/JPY: The case for a bearish reversal buildsUSD/JPY has delivered a decent trend for bulls so far this year, having risen 14% since the January low. Yet we have been fully aware that net-short exposure to yen futures has approached a historical extreme as USD/JPT prices rose towards 145. Incidentally, 145 was the upper range of the liquidity gap we mentioned in a previous article which has now been filled, and USD/JPY has printed a bearish engulfing week at the 145 handle. With risks of yen intervention very real and traders positioned so strongly to the short side of yen futures, we suspect USD/JPY is at or very near an important inflection point. What could make the difference between a natural pullback against the YTD trend or a sharp reversal could be incoming economic data from the US and Japan. A softer-than-expected CPI report for the US could likely help push USD/JPY lower, but the real bearish catalyst could be if the BOJ finally get serious about abandoning their YCC (yield curve control). Over the near-term, a move to the 140 and 138 handles seem achievable over the coming weeks as part of a much-deserved retracement against a one-sided trend so far this year.
Short
by CityIndex
CADJPY: Retracement Expected FirstI'm expecting a retracement from this pair soon. it's massively over-bought, that said I think it will push up to just past 110 to meet resistance before it does. I've got my alerts set at 110. Being over-bought is not a determining factor, we can see that recent previous high levels were more overbought than they are now, before retracement. I can also see that the loose monetary policy of BoJ continues to negatively affect the value of the Yen, and this doesn't look set to change, so I'll be waiting and watching - if we break resistance then we could be heading all the way up to 116 - 118 (last seen in 2007), but I do think we'll retrace first, down to 106.5 so could be around 350pips. I'll be using LTF's and wait for confirmation before executing any trade.
Short
by Finchcliffe
1
BOJ News ReleaseExpecting USDJPY to drop due to this evening's BOJ news release and press conference. Based on the nature of the news and market indicators, there is a strong chance that the developments favor the Yen over USD. If price goes over 141.500 there is a chance for a buy. Sell Entry: 140.000 Targets: 139.680 | 139.360 | 139.000 | 138.700 | 138.245 | 137.815 | 137.440 | 137.045 | 136.585 | 136.300 Support: 136.100 Resistance/Stop Loss: 141.500 Be sure to follow, like, and let me know what you think in the comments below.
Short
by DollarYenQueen
1
USD/JPY - Yen slides to 7-month low after Fed, BOJ meeting nextThe Japanese yen has taken a tumble on Thursday. In the European session, USD/JPY is trading at 141.24, up 0.81%. Earlier today, the yen fell as low as 141.50, its lowest level since November. The markets had widely expected the Federal Reserve to pause at the Wednesday meeting, especially after a favourable inflation release on Tuesday. Jerome Powell delivered a hawkish pause, as the rate statement signalled more rate hikes were on the way and the Fed revised upwards its growth and inflation projections for the fourth quarter. As well, the dot plot indicated two more small rate hikes this year. Powell said after the decision that the Fed had not made a decision about the July meeting, in keeping with his stance that each rate decision will be determined based on the data. The markets aren't buying that and have priced in a 71% probability of a July hike, according to CME FedWatch. Inflation is moving slower, but there's still a way to go before the 2% target is achieved and the markets expect Powell to keep his foot on the rate pedal after yesterday's brief time out. The markets will shift their attention to the Bank of Japan, which meets on Friday. The BoJ has been an outlier with regard to rate policy, adhering to an ultra-loose monetary policy. The Bank is expected to maintain key policy settings and may comment on the depreciation of the yen. The currency's sharp drop on Wednesday triggered verbal intervention from Chief Cabinet Secretary Hirokazu Matsuno, who voiced the standard line that excessive moves in the exchange rate were not desirable. The government has warned in the past that it could intervene to prop up the yen and made good on its threats in December, stunning the markets. If the yen's slide continues, we can expect more warnings out of Tokyo. USD/JPY is testing resistance at 141.21.  Above, there is resistance at 141.97 There is support at 140.29 and 139.53
by OANDA
FED Rate Hike Speculation; BOJ Maintains Accommodative StanceMay Inflation Data Release to Heighten Expectations of Rate Hike Next Tuesday, the United States is set to unveil its May inflation figures, impacting the Federal Reserve's upcoming monetary policy decision. Market forecasts anticipate a year-on-year increase of 4.2% in the Consumer Price Index (CPI), while the core annual CPI is expected to rise to 5.6%, surpassing the previous 5.5%. These figures, if realized, are likely to intensify speculation of an imminent rate hike prior to the Fed's announcement on Wednesday. Should the outcome exceed expectations, substantial volatility across the foreign exchange market is expected. Concurrently, the Federal Reserve's decision will contribute to market noise, with a pause in rates expected but accompanied by a hawkish message signaling the possibility of further rate hikes in the near future. In the event that the Fed confirms its commitment to monetary tightening, fears could trigger a stock market collapse while bolstering the US dollar. Bank of Japan (BOJ) Maintains Accommodative Stance Amid Economic Uncertainties The Bank of Japan (BOJ) recently signaled that inflation has exceeded initial projections. However, this observation does not automatically trigger an interest rate increase. BOJ Governor Kazuo Ueda emphasized the need to maintain highly accommodative policies until sustainable wage growth accompanies rising prices. Consequently, the BOJ is anticipated to maintain its current target short-term interest rate of -0.1% and a 0% cap on the 10-year bond yield, consistent with its yield curve control (YCC) policy. Furthermore, the BOJ is expected to adopt a slightly pessimistic view on exports and production due to weakened demand from the United States and China. In April 2023, the BOJ highlighted stagnation in exports and production. Nonetheless, as the central bank of the world's third-largest economy, the BOJ remains optimistic that the country will experience a moderate recovery driven by increased post-pandemic consumption, offsetting the impact of weak exports. Inflation is projected to surpass the BOJ's initial expectations. Analysts warn of the risks posed by rising inflation and the potential economic slowdown in Japan due to a severe overseas recession. While the BOJ will not issue new inflation projections next week, it is likely to signal during Governor Ueda's briefing session that inflation is exceeding initial projections. Analysts anticipate that the BOJ will revise its inflation forecast upward during its next quarterly review, considering the persistent price increases by many companies. However, the BOJ's forecast of core consumer inflation for the current fiscal year, at 1.8%, remains below analysts' projection of 2.6%. USDJPY Technical Analysis: Bullish Consolidation Amidst Channel, Watch for MFI Indicator and Resistance Bounce The USDJPY pair is currently experiencing a period of consolidation within a bullish channel, indicating a potential continuation of the upward trend. However, traders should closely monitor the Money Flow Index (MFI) indicator for a reading of 80, as it could signal a possible shift in market sentiment. Until the MFI remains below 80, the price has the potential to sustain its bullish trajectory. Nevertheless, caution is advised as a pullback towards the bearish direction may occur if the price encounters resistance and subsequently bounces off that level. In such a scenario, a bearish phase could ensue, with the price targeting the support line of the bullish channel.
by DNP-FX
2
USD/JPY punches above 140, Tokyo issues warningUSD/JPY is showing little movement on Tuesday. In the European session, USD/JPY is trading at 140.17, down 0.19%. The Japanese yen continues to underperform and has plunged 2.8% in May. The yen fell as low as 140.93 on Monday, its lowest level since November 21st. The sharp depreciation is raising concerns in Tokyo and Masota Kanda, a top official at the Ministry of Finance (MOF) weighed in on Tuesday. Kanda said officials were not focussing on particular exchange rate levels but said they were monitoring the forex market and "would respond appropriately". Kanda's veiled warning should not be ignored, as he blindsided the markets back in December when the MoF intervened in the currency markets in order to prop up the yen. Japanese releases have been solid, reinforcing speculation that inflation isn't going anywhere and the Bank of Japan may have to tighten policy. Service and manufacturing PMIs showed slight expansion last week and retail sales and industrial production will be released on Wednesday. Retail sales are expected to remain strong at 7.0% y/y in April, following a prior reading of 7.1%. Industrial production is projected to improve to 1.5% m/m in April, up from 1.1% in March. President Biden and Republican Speaker McCarthy have reached an agreement in principle on the debt ceiling, after weeks of brinkmanship between Republicans and Democrats. The deal must be approved in both houses of Congress, which is expected to happen despite grumblings from some Republicans. The weeks of uncertainty prior to the deal weighed on risk appetite and the big winners have been US Treasury yields and the US dollar. USD/JPY has support at 139.61 and 138.50 There is resistance at 140.88 and 141.73
by OANDA
1
USD/JPY - Yen sinks to 6.5 month low, is 140 next?The yen woes continue, as the currency has plunged a massive 400 points over the past week. In Thursday's North American session, the yen is trading at 138.52, up 0.60% on the day. USD/JPY hasn't been at such high levels since November 2022. All eyes will be on Japan's Core CPI release early on Friday. This is a key inflation indicator and could move the dial of the yen. The markets are expecting Core CPI to rise to 3.4% in April, after two straight readings of 3.1%. Inflation remains a key issue for the Bank of Japan. The new Governor, Kazuo Ueda, has continued the Bank's ultra-accommodative policy but has also hinted at taking steps towards normalization, such as adjusting the yield curve control (YCC) policy if inflation remains sustainable above 2%.  This week's GDP release showed growth in the first quarter was higher than expected, and that could raise expectations that the Bank will shift policy, perhaps in baby steps, in the near future. As for interest rate policy, we're unlikely to see any tightening before 2024. Federal Reserve Chairman Powell will speak on a panel later today, and the markets will be all ears. Powell has remained hawkish, saying that high inflation could result in further rate hikes. Powell has dismissed outright any rate cuts, but the markets still believe that the Fed will trim rates before the end of the year. JP Morgan weighed in earlier this week, saying they agreed with the markets that the Fed would cut rates, as the economy was likely to tip into a recession. USD/JPY is testing resistance at 138.42. Above, the next resistance line is 139.58 There is support at 137.08 and 136.42
by OANDA
1
USD/JPY - Japan's GDP improves but yen slipsThe Japanese yen is on a four-day losing streak and is in negative territory on Wednesday. In the North American session, the yen is trading at 137.39, up 0.74% on the day. Japan's GDP in the first quarter was higher than expected. The economy grew by 1.6% y/y, after a 0.1% decline in Q4 2022 and easily beat the estimate of 0.7%. On a quarterly basis, GDP expanded by 0.4%, up from 0.0% in Q4 and above the estimate of 0.1%. One key driver behind the spurt in growth was personal consumption, as demand continues to rise now that the country has reopened. The services sector remains strong but manufacturing continues to struggle. On a sour note, exports fell 4.2% in Q4, as demand for semiconductors and automobiles declined. The uptick in growth means that sustainable inflation could stay above 2%, and that could prod the Bank of Japan to take steps toward normalization, such as adjusting its yield curve control (YCC) policy. The BoJ has said it would consider tightening policy if inflation is sustainable above 2%, but any shifts in policy are likely to be small, especially if the yen remains weak. The BoJ announced it would conduct a policy review which could take a year or more, and I would not expect the BoJ to raise rates before 2024. Federal Reserve members continued to remind listeners that more rate hikes are possible if inflation stays high. The Fed has also tried to dampen expectations of rate cuts in the second half of the year. The markets are listening somewhat, as the odds of a rate cut this year have fallen. JP Morgan came out in support of rate cuts on Tuesday, saying that "the market is right to be penciling in cuts", as inflation remains too high and the US was likely headed for a recession. USD/JPY is testing resistance at 137.08. Above, the next resistance line is 138.42 There is support at 136.26 and 135.08
by OANDA
Will US CPI shake up sleepy yen?USD/JPY continues to have a quiet week and is almost unchanged, trading at 135.20. The markets will be keeping a close eye on the Bank of Japan's Summary of Opinions, which will be released later today. The summaries rarely move the dial on the yen, but this summary could be different, as it covers the April meeting which was the first chaired by Governor Kazuo Ueda. The BoJ did not change its policy settings at the meeting, but there are growing expectations that Ueda will take steps to normalize policy, which would boost the yen. At the meeting, the BoJ removed guidance on rate levels which committed to maintain rates at "current or lower levels" and announced it would review its monetary policy. Ueda said on Tuesday that there were positive signs in inflation and inflation expectations, and said the BoJ would end its yield curve control (YCC) policy once it was clear that inflation would "sustainably and stably meet our 2% target". The yen did not react to these comments, but it appears that Ueda is slowly but surely making plans to shift policy and gradually wind up former Governor Kuroda's massive stimulus program, which has been the hallmark of BoJ policy for years. The US release the April inflation report later today, and indications are that CPI remains sticky, which isn't great news for the Fed. Headline inflation is expected to remain unchanged at 5.0%, while the core rate is projected to tick lower to 5.5%, down from 5.6% in March. The Fed has signalled that it will pause rates next month, and this has been priced in by the markets at 78%, although there is a 21% of a rate hike, according to the CME Group. A hotter-than-expected inflation report would likely raise the probability of a rate hike and provide a boost to the US dollar. USD/JPY tested resistance at 135.37 earlier in the day. Above, the next resistance line is 137.24 There is support at 134.50 and 132.97
by OANDA