USD/JPY: Safe haven currency driven by risk-off

USD/JPY, H4

According to a survey of sentiment of leading Japanese firms (the Reuters Tankan Survey), the September index dropped to a five-month low of 18 from the 33 seen in August. Because most of the firms are export businesses, focusing on the automobile, manufacturing or transportation sectors, they remain significantly affected by the shortage of microchips which is an important piece of electronic equipment in most manufacturing processes. However, on the upside, as reported last week, Japan’s Q2 GDP growth was 0.5% higher than the first estimate of 0.3% and above the -1.1% contraction in Q1.

Yesterday, US CPI inflation for August fell to a seven-month low of 0.3% a month, below the 0.5% in July. Core inflation, excluding food and energy prices, was 0.1%, compared to the forecast 0.3%, while annual inflation was slightly lower at 5.3% per year (as expected), below the 5.4% seen in July and the 13-year high in June.

According to the japan times Japan has surpassed the United States with its first dose of vaccination at 63.6% of the population. Despite starting vaccinations later than the United States, the number of people who have received both doses is 51%, with 145.8 million doses administered.

Last night the USDJPY pair fell to a month low on the US inflation report, as the market prices in the risk that the USD may appreciate against other major currencies. However, it is weaker against the safe haven currencies JPY and CHF.

Yesterday’s fall in the USDJPY marks the start of another short-term downtrend, with the price breaking through the lower triangle trading below the MA50 and MA200, and the MACD having returned significantly below the 0 line. Next support is at 109.10 and the key support at the second half low at 108.75. Conversely, if the price is able to rise above the MA200 again, there will be a first resistance at 110.15 and a key resistance at the high of the month around 110.40.

Important information on today’s economic calendar includes New York Producer Confidence Index and US Industrial Production.

EUR/USD hits two-day highs near 1.1820

EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold climbs further, focus is back to 45,000

Gold regains upside traction and surpasses the $4,900 mark per troy ounce at the end of the week, shifting its attention to the critical $5,000 region. The move reflects a shift in risk sentiment, driving flows back towards traditional safe haven assets and supporting the yellow metal.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid risk-off, $2.6 billion liquidation wave

Bitcoin edges up above $65,000 at the time of writing on Friday, as dust from the recent macro-triggered sell-off settles. The leading altcoin, Ethereum, hovers above $1,900, but resistance at $2,000 caps the upside. Meanwhile, Ripple has recorded the largest intraday jump among the three assets, up over 10% to $1.35.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.