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US:

  • The Fed left interest rates unchanged as
    expected at the last meeting.
  • The macroeconomic projections were revised higher
    as the economy showed much stronger resilience than expected and the Dot Plot
    showed that the majority of members still expects another rate hike by the end
    of the year with less rate cuts in 2024.
  • Fed Chair Powell
    reaffirmed their data dependency but added that they will proceed carefully as
    they are trying to find the optimal level of rates. Powell also added that the
    soft landing is not the base case at the moment, although they are aiming for
    it.
  • The latest US Core PCE
    came
    in line with expectations with disinflation continuing steady.
  • The labour market
    displayed signs of softening although it remains fairly solid as seen also with
    another strong beat in Jobless Claims
    yesterday and with the beat in Job Openings.
  • The ISM Manufacturing PMI beat
    expectations while the ISM Services PMI came in
    line with forecasts in another sign that the US economy remains resilient.
  • The miss in the ADP report led to
    some USD weakness which might continue if the NFP data misses forecasts.
  • The market doesn’t expect the Fed to hike again at
    the moment.

Japan:

  • The BoJ kept everything unchanged as expected.
  • The Japanese CPI showed that inflationary pressures
    remain high with the core-core reading hovering at the cycle highs.
  • The Unemployment Rate missed expectations although it matched
    the previous reading.
  • The Japanese Manufacturing PMI fell further into contraction but
    the Services PMI remains in expansion.
  • BoJ governor Ueda repeated that they will not
    hesitate to take additional easing measures if needed and clarified that the
    recent comment on “quiet exit” from monetary easing was misinterpreted.
  • The Tokyo CPI, which is seen as a leading
    indicator for national CPI, continues to fall although it remains above the BoJ
    target.
  • The Japanese wage data today missed expectations which is
    unlikely to lead to a more hawkish BoJ since they want to see a higher wage
    growth.

USDJPY Technical Analysis –
Daily Timeframe

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USDJPY Daily

On the daily chart, we can see
that the USDJPY pair eventually crossed the key 150.00 level before getting
smacked back down by an intervention. The Japanese officials didn’t comment on
the intervention but it’s hard to deny after such a big and quick move.
Nonetheless, the price bounced back soon after and started to consolidate as
market participants might now be afraid to push above the 150.00 level without
a clear and strong catalyst.

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USDJPY Technical Analysis –
4 hour Timeframe

USDJPY 4 hour

On the 4 hour chart, we can see more closely the
intervention spike from the 150.00 level. The price is now below the trendline and the
massive divergence with the
MACD might
lead to a bigger correction into the 145.00 level, especially if the US data
starts to miss expectations. The miss in the Japanese wage data today might
lead to a short-term rally into the broken trendline, but the NFP report is
what is likely to lead to a more sustained move.

USDJPY Technical Analysis –
1 hour Timeframe

USDJPY 1 hour

On the 1 hour chart, we can see that the
price has been diverging with the MACD, which is generally a sign of weakening
momentum often followed by pullbacks or reversals. In this case, we might see a
rally into the 149.30 level where we have the confluence with
the broken trendline and the previous swing high level. This is where the
sellers are likely to pile in with a defined risk above the level to target the
145.00 level. The buyers, on the other hand, will want to see the price
breaking higher to try again a break above the 150.00 level.

Upcoming Events

Today it’s all about the NFP report which is the only one the Fed will
see before its next rate decision. The US jobs data going into the NFP was
strong, so the expectations might be skewed to the upside.

See the video below:

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