USD/JPY: risks skewed on the downside – Danske Bank

Haresh Menghani FXStreet

“USD/JPY is slightly under pressure this morning, as concerns about a potential US government shutdown weigh on the cross” writes Christin Tuxen, Chief Analyst at Danske Bank.

Key quotes:

“In the near term, we see USD/JPY within the range of 110.20-111.50 ahead of next week’s Bank of Japan (BoJ) meeting, with risks skewed on the downside amid stretched positioning, the risk of a potential US government shutdown, uncertainty about the BoJ’s future leadership and BoJ QE tapering concerns. Tuesday’s BoJ press conference at the BoJ meeting will be crucial for the JPY: we expect BoJ governor Haruhiko Koruda to repeat the dovish stance from the December meeting, which could temporarily support USD/JPY. However, any rally is likely to be short -lived as a soft stance from the BoJ might not be enough to restart significant JPY selling in the near term.”

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

Editor's Picks

EUR/USD drops to daily lows near 1.1630

EUR/USD now loses some traction and slips back to the area of daily lows around 1.1630 on the back of a mild bounce in the US Dollar. Fresh US data, including the September PCE inflation numbers and the latest read on December consumer sentiment, didn’t really move the needle, so the pair is still on course to finish the week with a respectable gain.

GBP/USD trims gains, recedes toward 1.3320

GBP/USD is struggling to keep its daily advance, coming under fresh pressure and retreating to the 1.3320 zone following a mild bullish attempt in the Greenback. Even though US consumer sentiment surprised to the upside, the US Dollar isn’t getting much love, as traders are far more interested in what the Fed will say next week.

Gold makes a U-turn, back to $4,200

Gold is now losing the grip and receding to the key $4,200 region per troy ounce following some signs of life in the Greenback and a marked bounce in US Treasury yields across the board. The positive outlook for the precious metal, however, remains underpinned by steady bets for extra easing by the Fed.