22 Aug 2013
USD/JPY continued higher to 98.81
FXstreet.com (Barcelona) - USD/JPY reached a high of 98.82 in London while the markets digested the FOMC minutes, which read a little more hawkish than expected. USD/JPY has been capped here for the time being although the ‘risk off’ conditions in the market is favouring the US dollar that included the JPY.
“Is this the end of the road for the USDJPY rally then? - Gareth Berry, strategist at UBS
Gareth Berry continued and wrote the following, “More generally, given Japanese investors are major holders of dollar-denominated bonds is the US dollar itself vulnerable here – especially given TIC data from the US Treasury also showed large foreign UST selling recently? No, quite the opposite. First, some of this ‘selling’ out of Japan was probably redemption-related. US$85 bn worth of UST notes and bonds matured last week. Second, over the past several months Japanese investors have tended to sell UST as yields climb, only to buyback again when yields stabilise. Third, not just Japanese investors, but investors more generally appear to be moving out of UST but then staying in dollar cash. Falling OIS and Fed effective rates suggest this. So USDJPY bulls need not be overly concerned by the overnight news flow. Rather, the widening spread between UST and JGB yields has created the conditions for further USDJPY upside. More generally, although US Treasury securities remain at risk of further selling from overseas, the dollar itself is unlikely to suffer from this. Indeed the opposite is happening – and for good reason − and we maintain our bullish dollar view”. Today, the focus is on the US and the weekly initial unemployment claims today that will be closely monitored after the impressive fall to just 320K last week. The results could prove a strong US labour market. The annual Jackson Hole conference for central bankers also starts today. However, there No prominent Fed speakers that are scheduled, so there shouldn’t be any new insight into Fed's monetary policy thinking.
USD/JPY technically in positive territory
Axel Rudolph Senior Technical Analyst at Commerzbank said, “Should last week’s high at 98.66 be bettered, however, we will have to allow for the current August high at 99.95 to be retested, along with the 2013 resistance line at 99.67. While these levels cap, recent downside pressure should be maintained, though”. The 20 DMA is 97.71, the 50 DMA is 98.40 and the 200 DMA is 94.21. RSI (9) reads 49.67. Supports are ascending from 97.13, 97.35, 97.55, and 97.85, 98.40. Spot is currently 98.68 while resistances are, 98.82 and 99.15.
“Is this the end of the road for the USDJPY rally then? - Gareth Berry, strategist at UBS
Gareth Berry continued and wrote the following, “More generally, given Japanese investors are major holders of dollar-denominated bonds is the US dollar itself vulnerable here – especially given TIC data from the US Treasury also showed large foreign UST selling recently? No, quite the opposite. First, some of this ‘selling’ out of Japan was probably redemption-related. US$85 bn worth of UST notes and bonds matured last week. Second, over the past several months Japanese investors have tended to sell UST as yields climb, only to buyback again when yields stabilise. Third, not just Japanese investors, but investors more generally appear to be moving out of UST but then staying in dollar cash. Falling OIS and Fed effective rates suggest this. So USDJPY bulls need not be overly concerned by the overnight news flow. Rather, the widening spread between UST and JGB yields has created the conditions for further USDJPY upside. More generally, although US Treasury securities remain at risk of further selling from overseas, the dollar itself is unlikely to suffer from this. Indeed the opposite is happening – and for good reason − and we maintain our bullish dollar view”. Today, the focus is on the US and the weekly initial unemployment claims today that will be closely monitored after the impressive fall to just 320K last week. The results could prove a strong US labour market. The annual Jackson Hole conference for central bankers also starts today. However, there No prominent Fed speakers that are scheduled, so there shouldn’t be any new insight into Fed's monetary policy thinking.
USD/JPY technically in positive territory
Axel Rudolph Senior Technical Analyst at Commerzbank said, “Should last week’s high at 98.66 be bettered, however, we will have to allow for the current August high at 99.95 to be retested, along with the 2013 resistance line at 99.67. While these levels cap, recent downside pressure should be maintained, though”. The 20 DMA is 97.71, the 50 DMA is 98.40 and the 200 DMA is 94.21. RSI (9) reads 49.67. Supports are ascending from 97.13, 97.35, 97.55, and 97.85, 98.40. Spot is currently 98.68 while resistances are, 98.82 and 99.15.