Japanese Yen: USD/JPY (JPY=X) gains, yuan weakens on report tariffs on China to stay through US election
China’s yuan weakened on Tuesday and the Japanese yen reversed earlier losses after a report that the United States will keep tariffs on Chinese goods through the U.S. election hurt risk sentiment.
The news came a day before the signing of a preliminary U.S.-China trade agreement to ease an 18-month-old trade war. Bloomberg News reported that the United States will review and remove existing tariffs no sooner than 10 months after the deal is signed.
The U.S. Treasury Department on Monday reversed its designation of China as a currency manipulator in what has been seen as a conciliatory gesture ahead of the deal signing.
Risk sentiment has improved and demand for safe-haven assets like the yen have decreased on signs that the two countries are closer to de-escalating the trade war that has been blamed as a major headwind to global growth.
The trade deal “doesn’t address the structural issues, but at least for markets it reduces some of the stress and some of the anxiety and uncertainty that plagued the markets throughout 2019,” said Mark McCormick, North American head of FX strategy at TD Securities in Toronto.
The yen gained to 109.92 after rising to 110.2, the most yen per dollar since May 23. The offshore yuan weakened to 6.89, after rising to 6.87 per dollar, the strongest since July 11.
The Swiss franc also hit session highs of 0.966 on safety buying, a day after the United States added Switzerland to its watchlist of currency manipulators.
The greenback rose against the euro as year-end rebalancing that had benefited the single currency at the expense of the dollar continued to be unwound.
“We are getting some of the reversal of that, along with, I think the macro story in Europe is still generally weak,” McCormick said.
The euro has fallen to $1.1130 from a five-month high of $1.1239 on Dec. 31.
Data on Tuesday showed that U.S. consumer prices rose slightly in December and monthly underlying inflation pressures retreated, which could allow the Federal Reserve to keep interest rates unchanged at least through this year. The next major U.S. economic focus will be retail sales on Thursday.
Overall, the bias in prices is: Upwards.
The projected upper bound is: 110.81.
The projected lower bound is: 109.16.
The projected closing price is: 109.99.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 7 white candles and 3 black candles for a net of 4 white candles. During the past 50 bars, there have been 25 white candles and 24 black candles for a net of 1 white candles.
A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 93.2277. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a buy 7 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 63.99. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 110 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 127.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a buy 5 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 2 period(s) ago.
Rex Takasugi – TD Profile
FOREX JPY= closed up 0.040 at 109.970. Volume was 9% below average (neutral) and Bollinger Bands were 9% wider than normal.
Open High Low Close Volume___
109.930 110.200 109.840 109.970 76,533
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 109.01 109.03 108.58
Volatility: 6 5 7
Volume: 74,602 78,642 86,925
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
FOREX JPY= is currently 1.3% above its 200-period moving average and is in an upward trend. Volatility is Our volume indicators reflect volume flowing into and out of JPY= at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on JPY= and have had this outlook for the last 1 periods.
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