USD/JPY: Tokyo open welcomes risk-on/investment data from Japan around 111.00

Markets cheer positive clues from the US-China trade discussions and Brexit.
Risk-events continue to remain in the spotlight with less data on hand.

Anil Panchal FXStreet

The USD/JPY pair is on the bids around 111.00 as Tokyo markets open on Thursday. Recently positive news reports concerning the trade deal between the US and China, coupled with Brexit deadline extension, joins mixed investment data from Japan to please the buyers. However, risk events and the US economic data will be in limelight from now onwards.

The Financial Times report that the US and China took another step forward and agreed to open enforcement offices in their respective countries to see better adaptations to the deal triggered early-day risk-on.

The risk sentiment was further supported by the Brexit developments at the EU summit and mixed Japan investment data. The EU leaders agreed to offer the Brexit deadline extension until October 31 to the UK. Japan’s foreign bond investment dropped to -1753.4 billion Japanese Yen (JPY) from upwardly revised 1243.90 billion prior whereas foreign investment in Japan stocks grew 1463.7 billion JPY from 438.5 billion (revised) previous.

The US 10-year treasury yield, the barometer of broader risk sentiment, is almost flat near 2.47%.

Global markets now look forward to the developments surrounding highlighted risk events like the US-China trade deal and Brexit. Adding to the burden is the latest developments surrounding North Korea as the Yonhap news reports that the North Korea leader signalled the need to deliver a serious blow to those imposing sanctions. Mr Kim is likely to meet the Russian leader soon. That seems a challenge to the US as Mr Trump is recently pressing the hermit kingdom for not obeying the nuclear deal proposed earlier.

The US initial jobless claims for the week ended on April 05 could also affect the market sentiment considering recent upbeat non-farm payrolls and the contrasting figures of JOLTS job openings. The first-time unemployment benefit claims may rise to 211K from 202K prior.

USD/JPY Technical Analysis

Having bounced off the 50-day and 100-day simple moving average (SMA) confluence region, the USD/JPY pair can target 111.30 ahead of confronting 200-day SMA level of 111.50 and current month high near 111.85.

On the downside, 110.95/90 support-confluence seem strongly challenging bears, a break of which can reprint 110.70. 110.30 and 109.80 rest-points on the chart.

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.