USD/JPY renewed 7-year highs as it rose to 119 yen mark. US currency continues strengthening, while the Japanese currency weakened.
Another round of weaker yen was triggered by the fundamental factors. Japan slipped into recession: the nation’s GDP fell by 1.6% in Q3 on the annualized basis. Traders were expecting a weak release, but they definitely didn’t think that the situation was so bad. As a result, Japanese government felt that it has to do something to save the fragile economy and decided to delay the unpopular sales tax hike until April 2017. In order to secure his positions for further reforms Prime Minister Abe dissolved parliament and called for a snap election on Dec. 14. In addition, the Bank of Japan’s Governor Kuroda has gathered support of the central bank’s majority for the monetary stimulus measures adopted at the end of Oct.
By the end of the week USD/JPY started correcting down. We assume that we’ve already seen the most of the growth. The market will now likely start discussing the upcoming elections. Although Abe’s party doesn’t have serious rivals, its position may worsen because of the recession. Many players may decide that the time to take profit has finally come. The 120 yen mark still looks attractive, but it’s going to provide a really strong resistance. On Thursday a “shooting star” was formed on the daily chart, so we can expect correction down and consolidation. Important support is located at 117.20 and 116.50.
On Monday Japanese markets will be closed because of the bank holiday. On Tuesday watch the release of the Bank of Japan’s meeting minutes and 2 speeches of Governor Kuroda. On Friday Japan will publish inflation, industrial production & retail sales figures.
Another round of weaker yen was triggered by the fundamental factors. Japan slipped into recession: the nation’s GDP fell by 1.6% in Q3 on the annualized basis. Traders were expecting a weak release, but they definitely didn’t think that the situation was so bad. As a result, Japanese government felt that it has to do something to save the fragile economy and decided to delay the unpopular sales tax hike until April 2017. In order to secure his positions for further reforms Prime Minister Abe dissolved parliament and called for a snap election on Dec. 14. In addition, the Bank of Japan’s Governor Kuroda has gathered support of the central bank’s majority for the monetary stimulus measures adopted at the end of Oct.
By the end of the week USD/JPY started correcting down. We assume that we’ve already seen the most of the growth. The market will now likely start discussing the upcoming elections. Although Abe’s party doesn’t have serious rivals, its position may worsen because of the recession. Many players may decide that the time to take profit has finally come. The 120 yen mark still looks attractive, but it’s going to provide a really strong resistance. On Thursday a “shooting star” was formed on the daily chart, so we can expect correction down and consolidation. Important support is located at 117.20 and 116.50.
On Monday Japanese markets will be closed because of the bank holiday. On Tuesday watch the release of the Bank of Japan’s meeting minutes and 2 speeches of Governor Kuroda. On Friday Japan will publish inflation, industrial production & retail sales figures.
Recommended Content
Editors’ Picks
EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.