USD/JPY on the bids near 109.60 as Tokyo open emphasize domestic data

Weak domestic price data highlights the need for BOJ’s easy monetary policy.
Second-tier economic numbers and market reaction after the extended weekend will be in the spotlight.

Anil Panchal FXStreet

The USD/JPY pair is taking the rounds near 109.60 as Japanese Yen (JPY) weakens on softer than expected domestic data around Tokyo open on Tuesday.

The April month corporate service price (YoY) dropped to the year’s low of 0.9%, needless to mention that it lagged behind 1.1% market consensus and prior.

With the sluggish domestic data emphasizing Bank of Japan’s (BOJ) easy monetary policy, investors cared less for recent risk events like EU election results and the trade stalemate between the US and China.

Reports of the mass attack in Tokyo (on 15 people) and Financial Times’ piece conveying Japanese macro advisers’ push to the BOJ towards more early policy also couldn’t gain market players’ attention.

The US and the UK markets were off on Monday which in turn portrayed less momentum.

The global risk barometer, 10-year treasury yields from the US, is in the negative territory to 2.315%.

Looking forward, second-tier data from the US, like house price index and consumer confidence, could be on the radar while the US and the UK traders’ reaction to latest market events will also be observed closely.

Technical Analysis

While 109.80, 110.30 and 100-day simple moving average (SMA) near 110.60 could keep limiting the pair’s near-term upside, 109.30, 109.00 and 108.50 might become sellers’ favorite during the decline.

Author

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

AUD/USD struggles below 0.7100, lowest since August 4 amid bullish USD

AUD/USD remains depressed below 0.7100 at the start of a new week, trading near its lowest level since August 4 amid a bullish US Dollar. US bond yields hold near multi-year highs amid inflation risks from higher oil prices and rising bets on a Fed rate hike in October. This, along with the US-Iran standoff, continues to underpin the safe-haven buck and weigh on the currency pair as traders now look to the RBA policy meeting on Tuesday.

USD/JPY climbs back to 157.75 after BoJ minutes amid firm USD

USD/JPY attracts some dip-buyers at the start of a new week, reversing part of Friday's slide driven by speculation that authorities will step in again to prop up the Japanese Yen. However, the BoJ's relative dovish-leaning tone caps the JPY. Meanwhile, the US Dollar regains traction as the US-Iran standoff supports crude oil prices, fueling inflation fears and reaffirming bets for an October Fed rate hike. This further support the pair.

Gold hangs near monthly low, around $4,250 as Fed hike bets and Iran risks underpin USD

Gold attracts fresh sellers at the start of a new week, sliding back closer to $4,250 and the lower boundary of the monthly range amid a bearish fundamental backdrop. Firming October Fed rate-hike bets, along with oil-driven inflation risks, keep US bond yields elevated near multi-year highs, helping the US Dollar regain positive traction and undermining the non-yielding bullion. Bears, however, await weakness below $4,235 before placing fresh bets.

Week ahead: Rate hike bets face a crucial data week

Despite the solid drop from the mid-September high, oil prices remained in the driver’s seat for another week, setting the tone in financial markets. Six months have passed since the late-February start of the US-Iran conflict, and there is still no breakthrough in the stalled talks, despite pressure from regional leaders and the rest of the world.

After the Trump Xi summit, markets are trading three clocks

The summit delivered time, not a deal. Trade, oil and chips now each run to a date, and the macro backdrop matters more than the pageantry. Markets wanted a deal and got a calendar date instead. Xi Jinping left Washington on Friday after tea at the White House and a tour of the National Archives.

Fed vs BoJ: Both hiked. The market only believes one of them – and the chart shows which

The Fed and the BoJ have just done something remarkably similar. Both central banks raised interest rates by 25 bps last week, both are confronting inflation risks, and both signal that future decisions will depend on incoming economic data.