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USD/JPY: Yen is boosted by Risk off sentiment, easing from 112.00
The US Dollar is trading down 0.6% at around 112.15 against the Japanese Yen after the massive sell-off on the Asian equities spurred Risk-off market sentiment benefiting Yen that is seen as a safe haven currency.
The Yen buyers are back in the market, as the risk-off theme extends into the European trading, with the USD/JPY pair now looking to test the 112 handle following a break below the key 112.54 support.
1. Technical Overview
The pair recovered some ground in the US afternoon but still holds below the short-term ascendant channel coming from 111.62, with the trend-line that draws the base of the figure at around 112.40 for this Wednesday. In the 4 hours chart, the price is well below its 100 and 200 SMA, with the shortest gaining downward traction above the larger one, as technical indicators stabilize in negative levels, keeping the risk leaned to the downside. A break below 111.60, however, is still needed for the pair to accelerate its decline, with scope then to reach 110.37, September low.
Support levels: 112.60 112.20 111.90
Resistance levels: 113.00 113.45 113.80
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2. Fundamental Overview
The Japanese yen was on demand for most of the day amid prevalent risk-averse mood, resulting in the USD/JPY pair bottoming at 111.94, its lowest for this week. The pair, however, bounced from the level alongside with US indexes, which anyway remained well into the red. US Treasury yields fell as demand for bonds surged, with the benchmark yield for the 10-year US Treasury note hitting a daily low of 3.11% from 3.19% Monday. Bank of Japan Governor Kuroda was said to have expressed concerns about "nervous" moves in global stocks, not something that can actually move the market, but a clear sign that volatility has become excessive. Japan will release its October preliminary Nikkei Manufacturing PMI, previous at 52.5, and the Leading and Coincident Indexes for August.
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3. Latest News & Analysis
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Influential Institutions & People for the USD/JPY
The US Dollar Japanese Yen can be seriously affected by news or the decisions taken by two main central banks:
The Bank of Japan is the central bank of Japan and it's a juridical person established based on the Bank of Japan Act, nor being a government agency either a private corporation. The most important missions of the BOJ are the following: to issue and manage banknotes, to implement monetary policy and to ensure stability of the financial system. Almost all of the decisions are taken by the Policy Board, formed by a bunch of members working to provide currency and monetary control and setting the next moves that the central bank will take.
BOJ Official Website and on Twitter
On the other
FED Official Website, on Twitter and Facebook
Haruhiko Kuroda
Haruhiko Kuroda was nominated, by Prime Minister Shinzo Abe, as Governor of the Bank of Japan in March 2013. He had previously worked as President of the Asian Development Bank for 8 years. As the head of the BOJ, he has a major influence over the Japanese Yen. His words are usually followed by traders in order to find any clue of next possible trend in the currency.
Draghi on BOJ'S Profile and Wikipedia
Janet Yellen
Janet L. Yellen (born August 13, 1946) took office as Chair of the Board of Governors of the Federal Reserve System (Fed) on February 3, 2014, for a four-year term ending February 3, 2018. She had already previously served as a Vice Chair from 2010 to 2014. This American economist also serves as Chairman of the Federal Open Market Committee (FOMC), the System's principal monetary policymaking body. Her declarations are also an important source of volatility, especially for the US Dollar and the currencies traded against it.
Yellen on Fed's Profile and Wikipedia
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FED NEWS & ANALYSIS
About USD/JPY
The USD/JPY (or US Dollar Japanese Yen) currency pair belongs to the group of 'Majors', a way to mention the most important pairs in the world. This group also includes the following currency pairs: EUR/USD, GBP/USD, AUD/USD, USD/CHF, NZD/USD and USD/CAD. Japanese Yen has a low interest rate and is normally used in carry trades. This is the reason why is one of the most trades currencies worldwide. In this pair the US Dollar is the base currency and the Japanese Yen is the counter currency. The pair represents American (from United States of America) and Japanese economies.
Trading this currency pair is also known as trading the "ninja" or the "gopher", although this last name is more frequently used when reffered to the GBP/JPY currency pair. The US Dollar Japanese Yen usually has a positive correlation with the following two pairs: USD/CHF and USD/CAD. The nature of this correlation is dued to the fact that both currency pairs also use the US Dollar as the base currency. The value of the pair tends to be affected when the two main central banks of each country, the Bank of Japan (BoJ) and the Federal Reserve Bank (Fed), face serious interest rate differential.
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Related pairs
GBP/USD
The GBP/USD (or Pound Dollar) currency pair belongs to the group of 'Majors', a way to mention the most important pairs worldwide. This group also includes the following currency pairs: EUR/USD, USD/JPY, AUD/USD, USD/CHF, NZD/USD and USD/CAD. The pair is also called 'The Cable', reffering to the first Transatlantic cable that was crossing the Atlantic Ocean in order to connect Great Britain with the United States of America. This term was originated in the mid-19th century and it makes GBP/USD one of the oldest currency pairs in the world.
The popularity of the Pound Dollar is due to the fact that represents two strong economies: British and American (from United States of America). The Cable is a widely observed and traded currency pair where the Pound is the base currency and the US Dollar is the counter currency. After the result of the Brexit referendum, where the majority of the British voted to abandon the European Union, GBP/USD has been suffering some turbulence in the Forex market as a consequence of the associated risks of leaving the single market.
EUR/USD
The EUR/USD (or Euro Dollar) currency pair is one of the 'Majors', or most important pairs in the world. This group also includes GBP/USD, USD/JPY, AUD/USD, USD/CHF, NZD/USD and USD/CAD. The Euro Dollar gathers two main economies: the European and American (from United States of America) ones. This is a widely traded currency pair where the Euro is the base currency and the US Dollar is the counter currency. Since this pair consists of more than half of all the trading volume worldwide in the Forex Market, it is almost impossible for a gap to appear.
Normally, the EUR/USD is very quiet during the Asian session because economic data that affects the fundamentals of those currencies is released in either the European or U.S. session. Once traders in Europe get to their desks a flurry of activity hits the tape as they start filling customer orders and jockey for positions. At noon activity slows down as traders step out for lunch and then picks back up again as the U.S. comes online.