USD/JPY: Bearish bias on the day – OCBC
|USD/JPY continued to trade lower, as expectations on BoJ hike next week continues to build. Markets are pricing in 22bp hike at the upcoming MPC (vs. 11bp hike expectations at the start of the new year). Pair was last at 155.69 levels, OCBC's FX analysts Frances Cheung and Christopher Wong note.
Risks remain skewed to the downside
"The shift this week in particular was due to comments from BoJ officials and a report in Japanese media, that said BoJ officials see good chance of an interest rate hike next week as long as Trump administration does not trigger too many negative surprises. Earlier this week, Governor Ueda spoke about making decision whether to raise rate at the upcoming BoJ meeting. He also shared there is positive views on wage hikes gathering momentum."
"Deputy Governor Himino also said MPC will discuss next week whether to raise rate or not and to raise rate if economic outlook is realized. All seem to point to high likelihood of a hike at the upcoming MPC (24 Jan). We continue to look for a hike as data continues to support policy normalization. Wage growth pressure remains intact, alongside broadening services inflation."
"Daily momentum is bearish while RSI fell. Risks remain skewed to the downside. Next support at 154.80 (50 DMA), 154.30 (23.6% fibo retracement of Sep low to Jan high) and 152.80 (200 DMA). Resistance at 156.40, 157.40 (21 DMA). Tactically, in our FX Weekly sent on Wed, we look for short SGDJPY targeting a move lower towards 110. Spot ref then at 115.10 with SL at 117.12. Cross was last at 113.70 levels."
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.