Things are rather looking good for this week closure. Financial markets are set to end the week in positive territory after multi-week losses while JPY eases at rumors of a provisory resolution in US – Mexican trade discord and risk of a recession following Japanese Cabinet Office assessment of the Japanese economy.

Mexican Foreign Minister Macelo Ebrard proposal to send 6’000 Members of the National Guard to secure the border and the recent procedure triggered by ruling Andres Manuel Lopez Obrador to uproot existing smuggler network appears to satisfy somewhat US authorities. Talks should continue on Friday while the final call should be on Sunday. The releases in Japan are yet not so promising. Although the Japanese economy shows signs of recovery as shown by April household spending up 1.30% (prior: 2.10; consensus: 2.60%) and maintained positive for the fifth consecutive period or April Coincident Index, which assesses business conditions in the economy, points at 101.9 (prior: 99.4), risk of recession is palpable. The Cabinet Office cut its economic assessment headline for the first time in over six years towards “worsening” from “weakening” in early January, as the increase in government consumption tax from 8% to 10% is scheduled for October 2019 while China’s economic slowdown weighs on production and exports. Speculations are even considering that the BoJ is set for further rate cut from current -0.10% to -0.30% during its 19 September 2019 meeting. The reason for the potential decision is notably due to a deterioration in economic growth and a weakening of inflationary pressures, partly due to a stronger yen, as well as to prevent a narrowing of the interest rate differential between the Fed and the BoJ following a Fed cut that could occur one day before. In this context, a status quo for the BoJ following the Fed's decision to cut rate could should strengthen JPY. For now, we assume JPY should stay in demand as US President Donald Trump will decide later this month whether he is ready to impose tariffs on an additional $300 billion for Chinese products.


 

Stay on top of the markets with Swissquote’s News & Analysis

 


 

This report has been prepared by AC Markets and is solely been published for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any currency or any other financial instrument. Views expressed in this report may be subject to change without prior notice and may differ or be contrary to opinions expressed by AC Markets personnel at any given time. ACM is under no obligation to update or keep current the information herein, the report should not be regarded by recipients as a substitute for the exercise of their own judgment.

Analysis feed

Latest Forex Analysis

Editors’ Picks

EUR/USD: traders set to position ahead of Fed

The EUR/USD pair moderated its advance on Friday, compliments to stronger-than-expected US data, finishing the week anyway with gains around 1.1070. Better-than-expected US data released Friday brought relief to USD bulls.

EUR/USD News

GBP/USD: Brexit optimism keeps bulls in the drivers’ seat

The GBP/USD pair has advanced for a second consecutive week, reaching Friday 1.2505, its highest since last July, and settling not far below this last. Fading odds for a hard-Brexit continue to underpin the Pound.

GBP/USD News

USD/JPY: further gains depending on risk-related sentiment

The USD/JPY pair settled above the 108.00 level for the first time since late July, closing substantially higher for a third consecutive week.  Demand for the safe-haven yen continued to be undermined.

USD/JPY News

The good, the bad and the extremely ugly crypto

XRP is in a borderline situation and with little room for doubt. Bitcoin demonstrates its power and positions itself as the emerging leader. Ethereum is in an intermediate situation, far from risk but also from opportunity.

Read more

Gold: Down for third straight week, on the defensive ahead of the Fed

Gold is set to end lower for the third straight week and will likely remain on the defensive in the run-up to Wednesday's Federal Open Market Committee (FOMC) meeting. A dovish surprise will likely put a strong bid under the yellow metal.

Gold News

Forex Majors

Cryptocurrencies

Signatures