USD/JPY: ticking lower on ECB headlines, although mostly quiet on U.S. 4th July holidays
|- USD/JPY is quiet during the North American holiday session.
- Some ECB members site the end of 2019 too late for a rate hike.
- EURJPY is showing signs of renewed weakness after struggling to extend above its 50 day MA (129.27).
USD/JPY is quiet during the North American holiday session, having entered the shift flat at 110.50, continuing the bullish reversal towards 110.60. However, there has been a slight give back in the dollar that had otherwise picked up the Chinese headlines bid with EUR/USD popping 20 pips on less dovish ECB noise.
There is chat on the street going around in times of low liquidity that some ECB members site the end of 2019 too late for a rate hike. Bloomberg came with the news and was citing ECB sources:
- Some ECB members are said to be uneasy that Sept/Oct 2019 rate hike is too late.
- Some ECB policymakers are uneasy that markets don't see a hike until Dec 2019.
Meanwhile, domestic developments have been limited and indeed, all eyes will turn to this week's nonfarm payrolls even on Friday. However, comments from BoJ's board member Harada have maintained a bias toward continued accommodation, highlighting the need for additional easing in the event of a loss of momentum on inflation, as noted by analysts at Scotiabank.
The week ahead:
Elsewhere, on Thursday, we have the ADP private employment, initial jobless claims, ISM non-manufacturing index and the FOMC minutes. Then the market's attention will turn to not just the U.S. nonfarm payrolls data but also the Chinese tariff threat that kicks on the same day.
USD/JPY levels
Analysts at Scotiabank explained that the USDJPY short-term technicals are neutral/bullish with momentum indicators that are only modestly bullish:
"the DMI’s are muted, and the ADX is trendless below 25. USDJPY is still trading comfortably above its 200 day MA (110.17) at the upper end of its multi-month range. EURJPY is showing signs of renewed weakness after struggling to extend above its 50 day MA (129.27)."
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