After the FED: USDJPY with bearish price driven by weak ISM data
Today, our main focus is the yield-sensitive USDJPY and the Non-Farm Payrolls, including the ISM Manufacturing data set.
After the FED cut rates by 25 basis points on Wednesday without delivering any significant further impulses or signs in regards to future monetary policy steps, today it will be interesting to see what the next economic data sets like the NFPs and the ISM Manufacturing data deliver.
This is especially true since the FED removed in her statement the sentence "Will Act As Appropriate" and replaced it with a more data-dependent one "Will Monitor Implications of Incoming Information for the economic outlook as it assesses the appropriate path of the target range for the fed funds rate".
So, if the ISM data continues to trend lower and result in rising recession fears (for September, the ISM Manufacturing dropped to 47.8, the steepest contraction in the manufacturing sector since June 2009), expectations of another rate cut by the FED in December could see a significant push higher, resulting in the US dollar facing heavier selling pressure into the weekly close.
The technical relevant and, in our opinion, make-or-break level in the USDJPY can be found in the region around 108.00/30. A sustainable break below activates 106.80/107.00 as a next target on the downside.
On the other hand: better than expected NFPs and ISM Manufacturing data could lead to some USD stabilisation. And an increasing risk-on approach among market participants and resulting JPY selling could result in another attack of the region around 109.00, even though chances of a sustainable break higher remain low in our opinion, especially after the sharp drop on Thursday.
Ready to start trading the live markets? Then open a free account with Admiral Markets - 8,000+ instruments to choose from, some of the market's tightest typical spreads, and the world's #1 multi-asset trading platform. admiralmarkets.com/start-trading/
Disclaimer: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 77% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
After the FED cut rates by 25 basis points on Wednesday without delivering any significant further impulses or signs in regards to future monetary policy steps, today it will be interesting to see what the next economic data sets like the NFPs and the ISM Manufacturing data deliver.
This is especially true since the FED removed in her statement the sentence "Will Act As Appropriate" and replaced it with a more data-dependent one "Will Monitor Implications of Incoming Information for the economic outlook as it assesses the appropriate path of the target range for the fed funds rate".
So, if the ISM data continues to trend lower and result in rising recession fears (for September, the ISM Manufacturing dropped to 47.8, the steepest contraction in the manufacturing sector since June 2009), expectations of another rate cut by the FED in December could see a significant push higher, resulting in the US dollar facing heavier selling pressure into the weekly close.
The technical relevant and, in our opinion, make-or-break level in the USDJPY can be found in the region around 108.00/30. A sustainable break below activates 106.80/107.00 as a next target on the downside.
On the other hand: better than expected NFPs and ISM Manufacturing data could lead to some USD stabilisation. And an increasing risk-on approach among market participants and resulting JPY selling could result in another attack of the region around 109.00, even though chances of a sustainable break higher remain low in our opinion, especially after the sharp drop on Thursday.
Ready to start trading the live markets? Then open a free account with Admiral Markets - 8,000+ instruments to choose from, some of the market's tightest typical spreads, and the world's #1 multi-asset trading platform. admiralmarkets.com/start-trading/
Disclaimer: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 77% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.