Japanese Yen: USD/JPY (JPY=X) Trump could trigger a break
The Dollar/Yen is trading lower on Monday as renewed concerns over U.S.-China trade relations encouraged investors to seek shelter in the safe-haven Japanese Yen.
Last week, the Forex pair was pressured by a series of weaker-than-expected U.S. economic report that dramatically increased the chances of a Fed rate cut at the end of October from 20% to 93.5%. Some of these losses were recovered on Friday when a solid U.S. Non-Farm Payrolls report dampened the chances of the Fed being aggressive with its rate cuts.
Today’s price action suggests investors are nervous over the outcome of the renewed trade talks between the United States and China in Washington on October 10-11. Since early September, optimism over a trade deal has driven the USD/JPY higher. Additionally, investors also lowered the chances of a Fed rate cut to about 20% during that time period.
The outlook on interest rates changed last week when the release of a disastrous ISM manufacturing PMI report and weaker-than-expected ISM non-manufacturing PMI report, fanned the flames of a U.S. recession.
Friday’s solid U.S. jobs report calmed talk about a recession, but over the weekend demand for safe-haven assets jumped after Bloomberg reported Chinese officials are signaling they are increasingly reluctant to agree to a broad deal pursued by U.S. President Donald Trump.
People familiar with the matter told Bloomberg News that Vice Premier Liu He, who will lead negotiations for China, told dignitaries that his offer to the U.S. will not include commitments on reforming Chinese industrial policy or government subsidies. These are among the Trump administration’s main demands in the trade talks.
In other news, a report showed Japan’s Leading Indicators came in at 91.7%, below the 91.8% forecast and the 93.7% previous read.
In the U.S. on Monday, Fed Chair Jerome Powell is scheduled to deliver a speech at 17:00 GMT.
On Friday, Powell described the U.S. economy as being solid, noting the central bank must do what it can to keep it there.
“While not everyone fully shares economic opportunities and the economy faces some risks, overall it is – as I like to say – in a good place,” Powell said in prepared remarks delivered at a “Fed Listens” event in Washington. The event is part of a monetary policy communication review by the Fed. “Our job is to keep it there as long as possible.”
Powell further added, “While we believe our strategy and tools have been and remain effective, the U.S. economy, like other advanced economies around the world, is facing some longer-term challenges – from low growth, low inflation, and low interest rates,” Powell said, adding the Fed is “examining strategies” that will help it achieve its inflation goal of 2%.
Overall, the bias in prices is: Sideways.
The projected upper bound is: 108.71.
The projected lower bound is: 105.79.
The projected closing price is: 107.25.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 26 white candles and 24 black candles for a net of 2 white candles.
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 28.4757. This is not an overbought or oversold reading. The last signal was a buy 0 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 48.93. 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 39 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 -90. This is not a topping or bottoming area. The last signal was a buy 0 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 9 period(s) ago.
Rex Takasugi – TD Profile
FOREX JPY= closed up 0.350 at 107.280. Volume was 12% below average (neutral) and Bollinger Bands were 34% narrower than normal.
Open High Low Close Volume___
106.960 107.450 106.550 107.280 79,767
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 107.46 106.95 109.08
Volatility: 7 9 7
Volume: 91,831 95,495 91,535
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 1.6% below its 200-period moving average and is in an upward trend. Volatility is relatively normal as compared to the average volatility over the last 10 periods. 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 21 periods.
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