Nov 01, 2022

VOT Research Desk

During early Tuesday morning in Europe, the USD/JPY pares intraday losses for the first time in three days, trading around 148.40-45.

The yen pair fell significantly during the first Asian session, owing to news from Japan as well as the US dollar’s decline and slow Treasury bond yields.

However, the bears have recently been challenged by the cautious atmosphere ahead of the critical US PMI and Wednesday’s all-important Federal Open Market Committee (FOMC).

Japan’s currency interventions have been covert in order to maximize the impact of its incursions into the market, according to Finance Minister Shunichi Suzuki, after the government spent a record $43 billion supporting the yen last month, according to Reuters.

The article also stated that Japanese officials are still tight-lipped about when they intervened in the market. The full scope of their actions will not be known until quarterly intervention data is revealed. The July-September data is scheduled to be issued early this month.

It is worth noting that recent lower US data has prompted US dollar traders to focus on Fed pronouncements, given the already priced-in 75 basis point rate hike. Keeping the quote’s upside intact might also limit the rise in US Treasury yields, as well as contradictory messages from US President Joe Biden and Russian leader Vladimir Putin.

Nonetheless, the October US Chicago Purchasing Managers’ Index and Dallas Fed Manufacturing Business Index were 45.2 and -19.4, respectively, versus 47.0 and -15.0 projected.

On Monday, US Vice President Joe Biden urged oil and gas corporations to use their record earnings to cut expenses. On the other side, Russia’s Putin stated that a gas hub may be established in Turkey very fast and that gas contracts will be completed. The Russian leader also stated that many people in Europe will wish to do so.

Against this environment, US 10-year Treasury rates remain slow near 4.05%, while equities futures show modest increases on forecasts of lower energy prices and inflation.

Moving on, the future moves of the Bank of Japan (BOJ) and the US Federal Reserve (Fed) will be key for USD/JPY traders to follow for new trends.

The October ISM Manufacturing PMI and S&P Global Manufacturing PMI for the United States will also be significant. However, it should be mentioned that

Oct 31, 2022

VOT Research Desk

During the second straight positive day, USD/JPY steadily climbs past 148.00, gaining 0.45% while retracing from the daily high of 148.26.

The market’s mixed emotion and anticipation of the Federal Open Market Committee (FOMC) meeting announcements and the October US jobs data may have contributed to the yen pair’s recent inaction.

Although the 10-week upswing was broken at the end of Friday, the US 10-year Treasury yields are now fluctuating around 4.00%.

The uneven movements of the stocks, which occur even as the Dow Jones is preparing for its highest monthly increase since 1976, present another challenge for USD/JPY traders. Retail Sales defended the yen optimists when Japan’s Industrial Production for September came in below expectations earlier in the day.

According to Reuters, Japan’s manufacturing output declined in September for the first time in four months as manufacturers battled rising raw material costs and the global economic slowdown.

The government warned the output is likely to dip again next month before rebounding up in November.

USD/JPY Technical Analysis

The 200-HMA tests the yen pair’s upward momentum near 148.40, but a two-day-old ascending trend line keeps USD/JPY investors hopeful until the quote smashes the 146.90 support.

Furthermore, it should be highlighted that the Bank of Japan’s (BOJ) reluctance to adjust its monetary policy in contrast to the Fed’s hawkish stance keeps USD/JPY purchasers optimistic.

Oct 28, 2022

VOT Research Desk

As the Bank of Japan (BOJ) maintained its current monetary policy settings and Governor Haruhiko Kuroda’s dovish language, the USD/JPY continued its unrelenting climb on Thursday during the European session.

The positive American advance Q3 GDP and end-of-week flows, along with the sustained recovery in the US dollar against its main counterparts, contribute to the resumed upside in the pair.

The pair is up 1% today to trade at 147.71 and is attempting to retake the 148.00 milestone.

In doing so, the major is making a good return from the 146.00 support zone, tested on the central bank’s policy statements.

The government would attempt to lower Japan’s CPI by 1.2% or more with the package, according to Japanese Prime Minister Fumio Kishida, who stated this on Friday.

Oct 27, 2022

VOT Research Desk

The US dollar’s attempt to bounce back from the multi-week lows at 145.00 level that were seen during Thursday’s European morning trade was limited at 147.00, and the pair fell lower before falling again below 146.00 at the time of writing.

Its lowest performance since late July, the pair is down 0.3% on the day as investors begin to factor in a slowing in the rate at which the Federal Reserve is tightening the money supply.

An alarm has been raised about the potential negative effects of an aggressive rate hike path that has driven the US currency approximately 20% higher during the current year in response to a recent set of depressing macroeconomic data.

Although the bank is widely anticipated to increase rates by 75 basis points the following week, there is growing market speculation that the increase will just be 0.50% in December’s meeting.

On the macroeconomic front, the positive US Gross Domestic Product, which increased at an unexpected 2.6% annual pace after two consecutive quarters of declines, has not been able to give the USD any meaningful assistance.

UOB’s FX analysts see further room for the pair’s decline, but it is still constrained at 144.00: “USD lost 1.05% yesterday (October 26) (NY close of 146.35), and albeit hesitantly, downward trend is developing.

The USD may trend lower over the next few days, but there is currently little chance of a prolonged slide below 144.00.

A break of the ‘strong resistance’ level at 148.80 would signal that the momentum has peaked on the upward.

Oct 26, 2022

VOT Research Desk

In the Asian session, the USD/JPY pair has successfully moved its trading over the crucial threshold of 148.00. As the risk-off impulse has returned, there has been a recent increase in demand for the asset at about 145.00.S&P500 futures have fallen precipitously as a result of investors’ reduced appetite for risk.

After a three-day purchasing binge, the 500-stock futures basket has dropped 1.15% as a result of Microsoft (MSFT) cutting its sales growth projection by 5%.

As safe-haven attraction increases, the US dollar index (DXY) has recaptured the round-level barrier of 111.00. Although there has been a slight recovery, the US Treasury alpha is still moving in a negative direction. After recovering from 4.05%, the 10-year US Treasury rates are again circling about 4.10%.

The US New Home Sales statistics will take center stage on Wednesday. The economic data is anticipated to decrease to 0.585M from the previous monthly release of 0.685M.

Due to their increased interest commitments, people have delayed their real estate demand as interest rates are rising quickly.

The US Gross Domestic Product (GDP) statistics will still be the powerful DXY’s ultimate trigger, though.

The annualized GDP is anticipated to increase considerably to 2.4% from the previously estimated fall of 0.6%.It is important to note that once the risk-on urge heated up on Tuesday, the USD/JPY pair’s reaction to a decrease was seen to be lower than the DXY’s decline.

Therefore, given that the risk aversion theme is weighing on markets, a rebound move in the USD/JPY pair may be firmer than the DXY.

Investors in Tokyo want greater information on the Bank of Japan’s (BOJ) covert activity in the currency markets so they may take well-informed positions. Additionally, the BOJ’s interest rate announcement on Friday will at best maintain the worry.

Most likely, BOJ Governor Haruhiko Kuroda would maintain his dovish stance in the face of lower demand and keep interest rates steady.

Oct 24, 2022

VOT Research Desk

In the Tokyo session, the USD/JPY pair has nearly fully recovered its morning losses and is trading at or near 149.00. The asset earlier fell as close to 145.48 as the US dollar index (DXY) saw severe volatility.

The DXY saw a huge swing between 111.46 and 112.26. Japan’s top currency envoy Masato said in early Asia that the government is prepared to take the necessary steps 24 hours a day to safeguard the Japanese yen against unilateral speculative swings in the currency market.

Japanese officials refused to comment on their participation in the FX markets but made a commitment to take the necessary steps to prevent irrational market movements.

The Bank of Japan’s (BOJ) decision on the interest rate, which is scheduled on Wednesday, will be crucial going ahead.

The BOJ will be compelled to maintain its dovish stance on interest rates due to weak economic fundamentals brought on by shocks to foreign demand.

Haruhiko Kuroda, governor of the BOJ, crossed lines this week by asserting that a shock to foreign demand may cause Japan’s economy to revert to deflation.

Oct 05, 2022

VOT Research Desk

Analytical Viewpoint

The USD/JPY might now revert to the 143.00 area in the next weeks, according to economist Lee Sue Ann and market strategist Quek Ser Leang of UOB Group’s Global Economics & Markets Research.

Daily perspective we were mistaken in thinking that the USD would ‘trade sideways between 144.20 and 145.15’ yesterday.

A low of 143.88 was reached by the USD before it continued to fall during early Asian trade. Rapidly increasing downward momentum raises the possibility of USD breaking 143.50. However, it seems doubtful that the USD will test the next significant support at 143.00. Upside, small barrier around 144.20 is likely strong enough to stop any intraday bounce.

Within the next one to three weeks: “Two days ago (03 Oct, spot at 144.70), we noted that the recent build-up in upward momentum has fizzled out and we projected USD to trade between 143.50 and 145.60. Before continuing to decrease today, the USD fell to a low of 143.88 yesterday. We anticipate USD will trade with a lower bias in the upcoming days, with a target price of 143.00, as short-term bearish momentum is increasing. If USD moves past the “strong resistance” level, which is now at 144.90, our conclusion will be invalidated.