USDJPY: USD attempting to regain momentum over JPY. June 18, 2019
June 18, 2019 1:22 pm
The US dollar managed to regain above 108.50 price area while the Japanese yen continues to increase profits.
Overall, the financial market of US is awaiting the FOMC meeting this week. The outcome of the meeting is expected to cause a surge in the volatility of the US Stock Market and US Dollar as well. Economists and investors generally agree that the Fed is going to cut rates this year. Former Fed Chairman Alan Greenspan recently argued that the last move in a series of hikes was often viewed in hindsight as unnecessary. The target range for the federal funds rate currently stands at 2.25% to 2.5%, which means the Fed may not have enough ammunition to fight a full-blown recession. That makes it more important for the Fed to be aggressive when it cuts, getting the most impact out of every step downward. With inflation running persistently below the Fed’s 2% target, and inflation expectations falling, that means the potential negative consequences of cutting too much are meaningfully reduced. The Fed is less likely to unleash unwanted higher inflation with aggressive cuts.
The central bank is expected to leave its benchmark overnight policy rate unchanged at its current range of between 2.25% and 2.5%. The federal funds rate has been at that level since December after a three-year cycle of monetary policy tightening that began slowly but ended with quarterly rate hikes over 2017 and 2018. Today US Building Permits report will be published. The value is expected to increase to 1.30M from the previous figure of 1.29M whereas Housing Starts is expected to be unchanged at 1.24M.
On the other hand, Bank of Japan Governor Haruhiko Kuroda recently stated that the central bank will certainly debate heightening overseas risks at a rate review this week while underscoring concerns among policymakers about the economic fallout of a U.S.-China trade war. Japan’s life insurers are holding out for the possibility that the Federal Reserve’s first rate cut in more than a decade will afford them better levels at which to be buying the US dollar. Rising expectations the Fed will cut interest rates to cushion its economy against blows from slowing trade and growth have undermined the dollar’s yield advantage. The risks to the economic outlook could add pressure on the government to boost spending to offset the potential blow from a planned sales tax hike in October.
According to the Japanese Government report, Japan’s economy is recovering at a moderate pace, while weakness in exports and industrial production continues. Tomorrow, Japanese Trade Balance report is going to be published which is expected to decrease to -0.80T from the previous figure of -0.11T and on Friday, Japanese Monetary Policy Statement along with BOJ Policy Rate report is going to be published which is expected to be unchanged at -0.10%.
Meanwhile, the upcoming Fed’s decision on rate cut is expected to have a great impact on the gains of USD.
Now let us look at the technical view. The price has been consolidating and correcting below 108.50 area for a few days now. Taking into consideration a strong bearish trend, the price is expected to push lower further with the target towards 105.00 support area in the coming days. As the trend is developing non-volatile bearish momentum, the downward move towards 105.00 area seems quite achievable.
The material has been provided by InstaForex Company – www.instaforex.com
The US dollar managed to regain above 108.50 price area while the Japanese yen continues to increase profits.
Overall, the financial market of US is awaiting the FOMC meeting this week. The outcome of the meeting is expected to cause a surge in the volatility of the US Stock Market and US Dollar as well. Economists and investors generally agree that the Fed is going to cut rates this year. Former Fed Chairman Alan Greenspan recently argued that the last move in a series of hikes was often viewed in hindsight as unnecessary. The target range for the federal funds rate currently stands at 2.25% to 2.5%, which means the Fed may not have enough ammunition to fight a full-blown recession. That makes it more important for the Fed to be aggressive when it cuts, getting the most impact out of every step downward. With inflation running persistently below the Fed’s 2% target, and inflation expectations falling, that means the potential negative consequences of cutting too much are meaningfully reduced. The Fed is less likely to unleash unwanted higher inflation with aggressive cuts.
The central bank is expected to leave its benchmark overnight policy rate unchanged at its current range of between 2.25% and 2.5%. The federal funds rate has been at that level since December after a three-year cycle of monetary policy tightening that began slowly but ended with quarterly rate hikes over 2017 and 2018. Today US Building Permits report will be published. The value is expected to increase to 1.30M from the previous figure of 1.29M whereas Housing Starts is expected to be unchanged at 1.24M.
On the other hand, Bank of Japan Governor Haruhiko Kuroda recently stated that the central bank will certainly debate heightening overseas risks at a rate review this week while underscoring concerns among policymakers about the economic fallout of a U.S.-China trade war. Japan’s life insurers are holding out for the possibility that the Federal Reserve’s first rate cut in more than a decade will afford them better levels at which to be buying the US dollar. Rising expectations the Fed will cut interest rates to cushion its economy against blows from slowing trade and growth have undermined the dollar’s yield advantage. The risks to the economic outlook could add pressure on the government to boost spending to offset the potential blow from a planned sales tax hike in October.
According to the Japanese Government report, Japan’s economy is recovering at a moderate pace, while weakness in exports and industrial production continues. Tomorrow, Japanese Trade Balance report is going to be published which is expected to decrease to -0.80T from the previous figure of -0.11T and on Friday, Japanese Monetary Policy Statement along with BOJ Policy Rate report is going to be published which is expected to be unchanged at -0.10%.
Meanwhile, the upcoming Fed’s decision on rate cut is expected to have a great impact on the gains of USD.
Now let us look at the technical view. The price has been consolidating and correcting below 108.50 area for a few days now. Taking into consideration a strong bearish trend, the price is expected to push lower further with the target towards 105.00 support area in the coming days. As the trend is developing non-volatile bearish momentum, the downward move towards 105.00 area seems quite achievable.
The material has been provided by InstaForex Company – www.instaforex.com
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