- USD/JPY: awaits Trump’s announcements on steel and aluminium tariffs at 20.30GMT today.
- USD/JPY: to break out of recent ranges on forthcoming key risks?*
USD/JPY has held its own in the aftermath of the ECB that took EUR/JPY through the floor and where the DXY rallied back onto the 90 handle. Currently, USD/JPY is trading at 106.09, up 0.01% on the day, having posted a daily high at 106.28 and low at 105.89.
While the ECB made a marginal hawkish tweak to the statement, seen as a precursor of a more substantial revision of the communication strategy in summer, before the ECB unwinds QE altogether by end-2018, analysts at Rabobank argued, it was not enough as the market had been built up for something more concrete and as such, the DXY flew while EUR/JPY dropped to 130.51 as the latest post ECB low today.
Meanwhile, on the domestic front, Japan’s economy expanded at an annualized rate of 1.6% (0.4% q/q) in the final three months of 2017, revised up from a preliminary estimate of 0.5% (0.1% q/q) growth due to an upward revision to capital expenditure. That compared with estimates of 1.0% annualized rate (0.2% q/q) – although this data was largely disregarded and appeared to have no material impact on movement in JPY.
Potential catalyst today – Trump?
It is worth noting that there is real money said to be selling ahead of the Japanese fiscal year-end but the yen is also at risk to a rebound in risk ahead f the BoJ*, (expectations for the upcoming BoJ policy decision are low), and NFP’s* tonight and tomorrow respectively. As a probable catalyst for USD/JPY, we have Pres.Trump in the spotlight today where he intends to make announcements on steel and aluminium tariffs at 20.30GMT today.*
“The broader tone remains critical as market participants focus on the U.S. administration’s proposed tariff plans and their implementation,” analysts at Scotiabank argued.
Analysts at Commerzbank explained that USD/JPY held sideways yesterday and that it remains capped by its 20-day ma at 106.87 arguing, that while below here it will remain directly offered. “Intraday Elliott wave counts on the 60 minute and 240-minute charts have neutralised and it is probable that we will see the market hold above the psychological support at 105.00 for now. Failure at 105.00 on a closing basis would trigger losses to the 100.70/99.00, 2016 low,” the analysts added.