- Markets jumped on a Bloomberg trade story which sent the yen back to a low of 108.90 vs the greenback.
- USD/JPY's advance to 200-DMA is still seen as corrective according to the 4-hours chart.
USD/JPY is steady in the Asia open as we head into the later part of the week in anticipation of critical Aussie, EZ and US data as well as a likely barrage of continuous trade headlines. USD/JPY is consolidating around 108.80 having rallied from below 108.50 to current levels. Markets jumped on a Bloomberg trade story which sent the yen back to a low of 108.90 vs the greenback while US stocks rallied with benchmarks on Wall Street snapping a three-day losing streak.
Investors brushed aside President Donald Trump's previous day's comments which had sent markets into a tailspin, as well as a Reuters story citing Chinese sources indicating that the US House bill on Xinjiang could jeopardise negotiations. Instead, investors cheered the Bloomberg's sources report that claimed the US and China are “moving closer to agreeing on the amount of tariffs that would be rolled back in a phase-one trade deal despite tensions over Hong Kong and Xinjiang.”
This was followed by, "The people, who asked not to be identified, said that U.S. President Donald Trump’s comments Tuesday downplaying the urgency of a deal shouldn’t be understood to mean the talks were stalling, as he was speaking off the cuff. Recent U.S. legislation seeking to sanction Chinese officials over human-rights issues in Hong Kong and Xinjiang are unlikely to impact the talks, one person familiar with Beijing’s thinking said."
US data in the mix of trade headlines weigh on USD
Besides trade headlines, the US dollar was subjected to yet further economic data disappointments. This time, the US Non-Manufacturing ISM missed the mark, falling below expectations for November, dropping to 53.9 from 54.7 prior. The data was expected at 54.5. The ADP November private payrolls also disappointed, with a rise of 67k against an estimate of 135k.
Given all of the above, the US 2-year Treasury yields climbed from 1.53% to 1.58% while the 10-year yields rose from 1.70% to 1.78%. "Markets are pricing a near-zero chance of easing at the Fed’s 11 Dec meeting but a terminal rate of 1.17% (vs Fed’s mid-rate at 1.63% currently)," analysts at Westpac noted.
As for US benchmarks, the Dow Jones Industrial Average added 146.97 points, 0.5%, to 27,649.78 while the S&P 500 index put on 19.56 points, or 0.6%, to close at 3,112.76. The Nasdaq Composite Index climbed 46.03 points, or 0.5%, to end the day at 8,566.67.
Key data on the horizon
Looking ahead, we have the last of a marathon of economic data that brings the Aussie into focus for this week – Trade Balance and Retail Sales are up for grabs. We then have Eurozone Q3 Gross Domestic Product. finally, for Friday in the US, Nonfarm Payrolls will be the major risk event to finalise the week.
USD/JPY levels
While bulls challenge the 200-DMA, Valeria Bednarik, the Chief Analyst, at FXStreet explained that USD/JPY advance is still seen as corrective according to the 4-hour chart:
- The pair is currently battling with a directionless 100 SMA, but below a firmly bearish 20 SMA.
- Technical indicators, in the meantime, recovered from oversold readings, with the RSI having lost upward strength currently at 47.
- The positive momentum needs to drive the pair beyond 109.30 for bears to give up.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD trades weak below 1.0800 amid Good Friday lull, ahead of US PCE
EUR/USD remains depressed below 1.0800 after soft French inflation data, amid minimal volatility and thin liquidity on Good Friday. The pair keenly awaits the US PCE inflation data and Fed Chair Powell's speech for fresh hints on next week's price action.
GBP/USD holds steady above 1.2600 as markets stay calm on Good Friday
GBP/USD trades sideways above 1.2600 amid a typical Good Friday trading lull. A broadly firmer US Dollar could keep any upside attempts limited in the pair ahead of the US PCE inflation data and Fed Chair Powell's appearance.
Gold reaches to all-time highs near $2,230, US PCE eyed
Gold price appreciates to all-time highs near $2,230 per troy ounce, attempting to continue its winning streak for the fifth successive session on Friday. However, trading volumes are light as market participants are likely observing Good Friday.
Jito price could hit $6 as JTO coils up inside this bullish pattern
Jito (JTO) price has been on an uptrend since forming a local bottom in early January. Since then, JTO has revisited the key swing point formed in early December, suggesting the bulls’ intention to move higher.
Key events in developed markets next week
Next week, the main focus will be inflation and the labour market in the Eurozone. We expect services inflation to be impacted by the easter effect, while the unemployment rate to be unchanged.