USD/JPY extends FOMC-led losses to Asia amid on-going risk aversion
|- USD/JPY stays under pressure after declining heavily during the post-Fed meeting session.
- The market smells fear in the Fed’s dot-plot, Chairman Powell’s speech, US-China trade worries remain on the cards.
- Japanese Machinery Orders can offer intermediate moves with all eyes on the US tariff decision by December 15.
USD/JPY holds modestly changed to 108.55 as Asian traders enter for Thursday’s session. Markets recently responded to the Federal Open Market Committee’s (FOMC) dovish stunt by broad US dollar (USD) weakness.
The Fed policymakers held their Gross Domestic Product (GDP) and Inflation targets unchanged while expecting no rate change in 2020. Even so, Chairman Jerome Powell’s speech escalated the risk-off moves as the comments indicate a cautious draw from the presently easy money policy with eyes on inflation recovery.
On Wednesday, the US Consumer Price Index (CPI), rose beyond forecast of 0.2% and 2.0% to 0.3% and 2.1% on MoM and YoY respectively. The CPI ex Food & Energy, known as Core CPI, stood unchanged at 0.2% and 2.3% on a monthly and yearly basis in that order.
All eyes on the US tariff deadline…
The United States (US) keeps on repeating that the trade talks with China are going well. However, China has a different opinion and asks for the cancellation of December 15 tariffs to carry on the discussions, as per the CNBC. Also, the recently released Global Times from China repeats the fashion of criticizing the US while saying, “US President Donald Trump can’t force China to yield on trade like Mexico.”
Given the lack of clarity concerning the phase-one, the US might go ahead with its planned December 15 tariffs on China. The same will reactivate trade war and could challenges the global economy again.
That said, the US 10-year treasury yields seesaw near the weekly low around 1.79% while the S&P 500 Futures seems to trim the post-Fed gains by the press time.
Moving on, Japan’s October month Machinery Orders, expected 0.9% versus -2.9% prior MoM, can entertain short-term traders amid eyes on trade headlines. Also affecting the pair moves will be the election in the United Kingdom (UK). The British election will pave the way for Brexit proceedings. The latest polls signal a hung parliament and further challenges to the likely re-elected present Prime Minister Boris Johnson.
Technical Analysis
Unless providing a daily closing beyond the 200-day Simple Moving Average (SMA) level of 108.80, prices can keep grinding lower to November lows near 107.90.
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