USD/JPY skyrockets through 112.00 as market re-adjusts Fed rate hikes pricing
The US Dollar has found an incredibly strong commitment to re-adjust its value into much higher levels across the board as a result of a more hawkish FOMC. USD/JPY saw an initial spike towards 112.00, followed by further follow through to touch a fresh daily high of 112.37.
1. Technical Overview
Looking at the technical picture, the pair has surpassed its daily ATR-14 period by over 20 pips at 112.15, although judging by the momentum indicators, tick volume as well as rising yield spreads, further rises may be seen towards 112.50 mid round number, ahead of 112.59 (R3); should further upside momentum be seen, 112.75/80 should not be ruled out ahead of 113.00. On the downside, pullbacks should definitely be perceived as buying opportunities.
On the wide, 112.22 is located at the 200-day ma and the top of the range is located at 114.38/49. 110.95/20 has been a previously supportive range. 110.62 is the daily cloud base ahead of the previous downtrend at 109.13 before the 108.13 April low and the recent low at 107.32.
USD/JPY PRICE SENTIMENT
USD/JPY BULLISH PERCENTAGE INDEX
2. Fundamental Overview
The monetary policy stance announced by the Federal Open Market Committee (FOMC) in its statement on September 20th, 2017, after a 2-day meeting, determined to leave interest rates unchanged and start the balance sheet reduction in October.
Among the key headlines, we found the Fed still considering one more rate hike in 2017, while Fed's projections point to three rate hikes in 2018, two in 2019 and one in 2020. Fed cuts estimate of longer-run neutral rate to 2.75 pct from 3.00 pct...
The Federal Reserve also published its updated economic projections, with key headlines, via Reuters, reading that the median view of appropriate federal funds rate at end-2017 1.375 pct (prev 1.375 pct); end-2018 2.125 (prev 2.125 pct): end-2019 2.688 (prev 2.938 pct); end-2020 2.875; longer-run 2.750 pct (prev 3.000 pct)...
Later on Thursday, the Bank of Japan (BoJ) is widely expected to maintain its policy stance unchanged at its meeting ending on Sept 21st, including its ‘QQE with yield curve control’. In fact, in the latest Bloomberg survey (8-13 September), none of the economists expect policy to change this week. While there is always a need to re-evaluate new policy inputs in each meeting, the outlook for the BoJ to make any significant changes to its policy in the next 6-12 months horizon is fairly low.
USDJPY FUNDAMENTALS TODAY
3. Latest News & Analysis
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.
On the other
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.
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.
BOJ NEWS & ANALYSIS
FED NEWS & ANALYSIS
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.
USDJPY 2017 YEARLY FORECAST
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.
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.