Yen Pushing Higher
USDJPY is trading at its lowest level in over 5 months today as the Dollar continues to lose ground amidst ongoing trade woes. JPY meanwhile has become an attractive safe haven play for those looking to divert capital away from USD. With hawkish BOJ expectations underpinning the rise in JPY too, the pair looks poised to continue lower near-term with traders now looking to tomorrow’s US labour market data for a further push.
US Data on Watch
Yesterday, the ADP figure was seen coming in well below forecasts at 77k vs 141k expected, down sharply from the prior month’s 183k reading. On that back of that data there is now chatter of a weaker number coming through on the headline NFP print tomorrow. If seen this should further amplify USD selling near-term.
USD Sentiment
Indeed, given that USD has ignored strong ISM PMI readings this week, the weight of current bear sentiment towards the Dollar is clear. Against this backdrop, any undershooting of forecasts tomorrow is likely to see USDJPY accelerating lower near-term. Additionally, any hawkishness from the ECB today, leading to a further rise in EUR should add to USD selling here.
Fed Easing Expectations
Near-term Fed rate-cut expectations have crept up recently with traders now sensing a greater likelihood of an earlier cut in June. Pricing for a cut in May has even risen to around 40%. If we do see fresh weakness in tomorrow’s readings this should see rate cut expectations taking another leg higher here.
Technical Views
USDJPY
The sell off has seen the pair breaking below support at the 149.30 which had underpinned the market firmly in December. Price is now fast approaching a test of the 146.81 level and with momentum studies bearish, risks of a deeper move lower are growing.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.