Japanese Yen: USD/JPY (JPY=X) Safe-haven yen lifted, US dollar hits in Grim data after Qassem Soleimani strike
Investors rushed into safe-haven assets on Friday after US airstrikes in Iraq killed a senior Iranian military official, sending the Japanese yen to a three-month high, while the US dollar index was knocked by the weakest domestic factory activity in a decade.
In addition to the yen, US Treasuries, German bunds and gold rallied after the overnight airstrike in Baghdad killed Qassem Soleimani, Tehran’s most prominent military commander and the architect of its growing military influence in the Middle East.
“Overall, geopolitical risk premia have risen substantially overnight,” said Karl Schamotta, chief market strategist at Cambridge Global Payments. Investors were “really looking for safe havens and a port in the storm,” he added.
The Japanese yen had risen as high as 107.82 per dollar and was last up 0.48 per cent on the day at 108.04. The yen is often seen as a haven from risk, given Japan’s status as the world’s largest creditor nation. A holiday in Tokyo also made for thin conditions, exaggerating the move.
The US dollar index initially benefited from the move into safe-haven assets, but those gains were erased after the Institute for Supply Management (ISM) reported that the manufacturing sector contracted significantly in December. It was last up 0.03 per cent on the day at 96.873.
The attack sparked concerns about crude supply disruptions, lifting oil prices more than $3. Petrocurrencies gained slightly on the higher crude prices, but those were then largely offset by the overall move away from risk, said Schamotta.
The US manufacturing sector contracted in December by the most in more than a decade, with order volumes crashing to a near 11-year low and factory employment falling for a fifth straight month, according to a report from ISM released on Friday.
“That is a depressing number,” said Schamotta.
It suggests “trade war-related uncertainty has actually damaged the manufacturing sector on a sustained basis and that points to weakness in GDP, particularly in the coming quarter because what you’re likely to see is an inventory drawdown as opposed to continued build.”
The longer-term effects on the dollar are unclear. Though it weakened Friday, the greenback may ultimately benefit if slower US manufacturing dents hopes for global growth in 2020.
“The idea that other countries that are large exporters to the US might see a large rebound in the near term, that idea is losing traction here,” said Schamotta.
Overall, the bias in prices is: Sideways.
The projected upper bound is: 108.70.
The projected lower bound is: 107.00.
The projected closing price is: 107.85.
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 3 white candles and 7 black candles for a net of 4 black candles. During the past 50 bars, there have been 22 white candles and 27 black candles for a net of 5 black candles.
Three black candles occurred in the last three days. Although these candles were not big enough to create three black crows, the steady downward pattern is bearish.
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 16.5074. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a buy 1 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 31.08. 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 104 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 -165.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 25 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 sell 5 period(s) ago.
Rex Takasugi – TD Profile
FOREX JPY= closed down -0.210 at 107.870. Volume was 97% below average (consolidating) and Bollinger Bands were 6% wider than normal.
Open High Low Close Volume___
107.990 107.990 107.810 107.870 2,123
Short Term: Oversold
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 108.85 108.92 108.64
Volatility: 4 5 6
Volume: 51,378 76,279 86,558
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 0.7% below its 200-period moving average and is in an downward 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 bearish on JPY= and have had this outlook for the last 3 periods.