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USDJPY - Selling ralliesUSDJPY - Intraday - We look to Sell at 138.16 (stop at 139.16) The rally was sold and the dip bought resulting in mild net losses yesterday. The medium term bias is neutral. Bespoke resistance is located at 138.16. A Fibonacci confluence area is located at 143.82. Although the anticipated move lower is corrective, it does offer ample risk/reward today. Our profit targets will be 135.10 and 133.60 Resistance: 138.16 / 139.91 / 141.63 Support: 135.10 / 133.60 / 130.18 Please be advised that the information presented on TradingView is provided to Vantage (‘Vantage Global Limited’, ‘we’) by a third-party provider (‘Signal Centre’). Please be reminded that you are solely responsible for the trading decisions on your account. There is a very high degree of risk involved in trading. Any information and/or content is intended entirely for research, educational and informational purposes only and does not constitute investment or consultation advice or investment strategy. The information is not tailored to the investment needs of any specific person and therefore does not involve a consideration of any of the investment objectives, financial situation or needs of any viewer that may receive it. Kindly also note that past performance is not a reliable indicator of future results. Actual results may differ materially from those anticipated in forward-looking or past performance statements. We assume no liability as to the accuracy or completeness of any of the information and/or content provided herein and the Company cannot be held responsible for any omission, mistake nor for any loss or damage including without limitation to any loss of profit which may arise from reliance on any information supplied by Signal Centre.
Short
by VantageMarkets
1
USD JPY - FUNDAMENTAL DRIVERSUSD FUNDAMENTAL OUTLOOK: BULLISH BASELINE The Fed is on a data-dependent (meeting-by-meeting) policy stance, meaning incoming growth, inflation and jobs data remains a key driver for short-term USD volatility where we expect a cyclical reaction for both the USD and US10Y (good data expected to be supportive for the USD and US yields while bad data is expected to pressure the USD and US yields). The Fed is still under pressure to continue hiking rates and ramping up QT, but last week’s decent deceleration in the OCT CPI report has given markets some solace from inflation angst. Money markets shed about 30bsp off the implied terminal rate. As a result of this the USD saw intense selling but has largely stabilized this week. Like we’ve said many times, right now is all about the data. The data will lead the Fed, which means the data is what we should follow for high probability short-term directional flows for the USD. In the week ahead, we have a few of important data points such as ISM Manufacturing PMI and NFP on Friday. However, also pay close attention to the scheduled speech from Fed Chair Powell on Wednesday. POSSIBLE BULLISH SURPRISES With the Fed signalling a data dependent policy stance, we expect a cyclical reaction from the USD with incoming US data. Thus, extremely good growth, inflation or jobs data is expected to trigger short-term bullish reactions in the USD. If the cyclical outlook continues to weaken, the USD’s safe haven status still matters. Any incoming catalysts that increase deep recession fears and triggers strong moves lower in risk assets & bonds can trigger safe haven flows into the USD. With a lot priced for the Fed and USD, the bar is high for hawkish Fed surprises, but any aggressive Fed speak talking up a >5.5% terminal rate can trigger further USD upside. The speech from Fed Chair Powell will be important. If he delivers the same stern hawkish tone that accompanied the prior FOMC presser, it can provide upside for the USD. POSSIBLE BEARISH SURPRISES With the Fed signalling a data dependent policy stance, we expect a cyclical reaction from the USD with incoming US data. Thus, extremely bad growth, inflation or jobs data is expected to trigger short-term bearish reactions in the USD. If the cyclical outlook starts to improve, the USD’s safe haven status still matters. Any incoming catalysts that decrease deep recession fears and triggers strong moves higher in risk assets & bonds can trigger safe haven outflows out of the USD. With a lot priced in for the Fed and the USD, it won’t take much to disappoint on the dovish side. Any big concerns about growth from Fed speakers could trigger outflows. BIGGER PICTURE The fundamental outlook for the USD remains bullish as long as the Fed stays aggressively hawkish and cyclical concerns put pressure on risk sentiment. However, it’s also important to remember that the data leads the Fed. That means, even though the USD remains fundamentally bullish in the currency negative cyclical environment, it’s short-term direction will largely be determined by the incoming data. Thus, in the current context, we prefer trading the USD in the short-term with scalps out of key US economic data points. JPY FUNDAMENTAL OUTLOOK: BEARISH In recent weeks, yield differentials of course have been the biggest driver for the JPY with the BoJ keeping 10-year JGB yields capped at 0.25% with yield curve control while other central banks are hiking rates aggressively. However, Japan has intervened in the FX market twice buying JPY and selling USDs. The intervention saw short-term downside in XXXJPY pairs, but as the fundamental remains bearish it’ll take constant intervention to stop the JPY from falling. In the week ahead, focus will remain on any big moves in US yields (especially with further incoming US data). POSSIBLE BULLISH SURPRISES Catalysts that push US10Y lower (less hawkish Fed, lower UC CPI, lower growth) could trigger bullish reactions from the JPY. Any catalyst that triggers meaningful downside in key commodities like Oil (deteriorating demand outlook, ease in supply shortage) could trigger bullish JPY reactions. POSSIBLE BEARISH SURPRISES Any catalysts that push US10Y higher (more aggressive Fed, higher US CPI, better growth) could pressure the JPY. Catalyst that triggers meaningful upside in Oil (improving demand, decreased supply) could trigger JPY downside. BIGGER PICTURE The fundamental outlook remains bearish for the JPY due to yield differentials and the impact of a weaker JPY on the current account balance. As long as US10Y remain elevated and the BoJ stays stubbornly dovish and no currency intervention occurs, the bias remains lower. But take note of positioning which means we don’t want to chase the JPY lower, especially with the risk of further currency intervention should the JPY continue to weaken. The best opportunities for now remain short-term focused on further intervention or strong moves lower in US yields.
by thunderpips
6
USDJPY - No clear indication that the downward move is endingUSDJPY - Intraday - We look to Sell at 137.50 (stop at 138.50) Traded to the lowest level in 68 days. The 261.8% Fibonacci extension is located at 133.72 from 152.01 to 145.02. There is no clear indication that the downward move is coming to an end. Previous support now becomes resistance at 137.50. Intraday signals are far from strong. Our profit targets will be 133.75 and 133.50 Resistance: 137.50 / 139.91 / 142.07 Support: 136.36 / 133.72 / 130.02 Please be advised that the information presented on TradingView is provided to Vantage (‘Vantage Global Limited’, ‘we’) by a third-party provider (‘Signal Centre’). Please be reminded that you are solely responsible for the trading decisions on your account. There is a very high degree of risk involved in trading. Any information and/or content is intended entirely for research, educational and informational purposes only and does not constitute investment or consultation advice or investment strategy. The information is not tailored to the investment needs of any specific person and therefore does not involve a consideration of any of the investment objectives, financial situation or needs of any viewer that may receive it. Kindly also note that past performance is not a reliable indicator of future results. Actual results may differ materially from those anticipated in forward-looking or past performance statements. We assume no liability as to the accuracy or completeness of any of the information and/or content provided herein and the Company cannot be held responsible for any omission, mistake nor for any loss or damage including without limitation to any loss of profit which may arise from reliance on any information supplied by Signal Centre.
Short
by VantageMarkets
USDJPY bearsUSD/JPY: curve inversion taking over? While the FOMC Minutes showed that a substantial majority of FOMC members thought it would likely soon be appropriate to reduce the pace of rate hikes, they also pointed to various members believing the terminal rate was somewhat higher than previously expected. This rhetoric echoed that of Chair Jerome Powell in his post-meeting press conference as well as other FOMC members since the meeting. The Fed staff also saw the possibility of recession over the next year as almost as likely as a baseline forecast. USD/JPY declined on this rhetoric and we note that the US 2-10sY spread has dipped further and to -80bp as the risk of US recession is seen as growing. While the US-Japan short-term rates differential remains the strongest driver of USD/JPY according to our FAST FX model of the exchange rate, the US-Japan box yield spread is beginning to have a larger impact as the UST curve further inverts. With the market pricing in a Fed Funds terminal rate of around 5%, there is significant risk of this pricing being forced to move higher and take the USD/JPY along with it, however, especially if inflation remains sticky to the upside. With the US on holiday for Thanksgiving, USD/JPY may quieten down a little. Investors will be wary of the Tokyo CPI data on Friday and any upside surprise in the data given its strong correlation with the nationwide inflation data. Further modest acceleration in Tokyo inflation is expected, which will place equally modest pressure on the BoJ to relinquish its YCC. ©Crédit Agricole Securities (USA) As traders, we need to be aware of the lows from 15th November. A break through there and we have a much larger drop.
Short
by Macrobriefing
USDJPY falling, because of Treasury buying?Private foreigners have purchased just over half a trillion - yes, Trillion - LT USTs in the past six months (sorry, no #brettonwoods3) Why such huge demand for safe, liquid US$ instruments? Not a whole lot of trust for the Fed's toolkit and use. © Jeff Snider What is the reaction to buying UST's? The yields come lower. Interest rates come lower. What does the Fed do? Follows the markets. We're seeing a drop off in the US 10 Year Yield and this is also part of a wider yield curve inversion in the eurodollar market. Inversions signal troubles ahead, so anyone with money goes to the safest assets. Namely sovereign bonds and ultimately US sovereign debt. The USDJPY has been tracking the move of US10Y and also either accelerated or decelerated depending on whats going on in the oil markets. Japan is heavily dependent on importing energy, so a higher Oil price means the Japanese economy gets crushed and the yen drops. Oil prices are coming lower at present.
Short
by Macrobriefing
5
USDJPY: Key Levels to Watch 🇺🇸🇯🇵 Here is my latest structure analysis for USDJPY: Resistance 1: 140.37 - 142.47 area Resistance 2: 145.1 - 145.6 area Resistance 3: 148.3 - 148.9 area Resistance 4: 151.34 - 151.92 area Support 1: 137.48 - 138.0 area Support 2: 135.16 - 136.45 area Support 3: 130.38 - 131.75 area The price is currently stuck between Resistance 1 and Support 1. The future direction of the market will be determined by a breakout of one of these structures. Alternatively, consider pullback trading from them ❤️If you have any questions, please, ask me in the comment section. Please, support my work with like, thank you!❤️
Short
by VasilyTrader
11
Today’s Notable Sentiment ShiftsGBP – The pound rallied off session lows on Monday and gilts bounced, as former finance minister Rishi Sunak won the race to become the next prime minister, giving investors a greater sense of confidence in the robustness of Britain’s finances. JPY – Japanese policymakers on Monday continued efforts to tame sharp yen falls, including through two straight markets days of suspected intervention, but ultimately failed to prop up the currency against persistent dollar strength.
by thunderpips
USD JPY - FUNDAMENTAL DRIVERSUSD FUNDAMENTAL OUTLOOK: BULLISH BASELINE With headline CPI above 8% and Core CPI seeing another acceleration in the SEP CPI data, the Fed is under pressure to continue hiking rates and ramping up QT. Markets expect another 75bsp hike in NOV and currently prices the terminal rate at 4.8%. The Fed is on a data-dependent (meeting-by-meeting) policy stance, meaning incoming growth, inflation and jobs data remains a key driver for short-term USD volatility where we expect a cyclical reaction with incoming data for both the USD and US10Y (good data expected to be supportive for the USD while bad data is expected to pressure the USD). Another choppy week for the USD finishing 0.5% stronger on the week but keeping a small range. With a quiet week ahead on the data side, the USD is most likely going to get most of it’s momentum from overall risk flows. POSSIBLE BULLISH SURPRISES With the Fed signalling a data dependent policy stance, we expect a cyclical reaction from the USD with incoming US data. Thus, extremely good growth, inflation or jobs data is expected to trigger short-term bullish reactions in the USD. If the cyclical outlook continues to weaken, the USD’s safe haven status still matters. Any incoming catalysts that increase deep recession fears and triggers strong moves lower in risk assets & bonds can trigger safe haven flows into the USD. With a lot priced for the Fed and USD, the bar is high for hawkish Fed surprises, but any aggressive Fed speak talking up a >5.0% terminal rate can trigger further USD upside. POSSIBLE BEARISH SURPRISES With the Fed signalling a data dependent policy stance, we expect a cyclical reaction from the USD with incoming US data. Thus, extremely bad growth, inflation or jobs data is expected to trigger short-term bearish reactions in the USD. If the cyclical outlook starts to improve, the USD’s safe haven status still matters. Any incoming catalysts that decrease deep recession fears and triggers strong moves higher in risk assets & bonds can trigger safe haven outflows out of the USD. With a lot priced in for the Fed and the USD, it won’t take much to disappoint on the dovish side. Any big concerns about growth from Fed speakers could trigger outflows. BIGGER PICTURE The fundamental outlook for the USD remains bullish as long as the Fed stays hawkish and cyclical concerns put pressure on risk sentiment. The data dependent stance from the Fed means that short-term data surprises can pull the USD either way and would be our preferred way of trading the Dollar right now. The calendar is extremely light in the week ahead, which means overall risk sentiment could be the biggest source of momentum (which means keeping a close eye on further equity and bond market sell offs). Keep in mind earnings season gets a bit mor exciting this week and will be important to watch for risk. JPY FUNDAMENTAL OUTLOOK: BEARISH BASELINE In recent weeks, yield differentials of course have been the biggest driver for the JPY with the BoJ keeping 10-year JGB yields capped at 0.25% with yield curve control while other central banks are hiking rates aggressively. Thus, right now the JPY is pressured as yields have soared for the sky, but the threat and risk of further intervention could keep weakness limited. Japanese authorities intervened in the FX market in September by buying JPY and selling Dollars for the first time since 1998. The intervention saw some short-term downside of USDJPY , but as of Friday USDJPY almost reached 149 without any sign of further intervention action. The bias for USDJPY remains higher fundamentally speaking as yield differentials are still very wide, so unless authorities actively intervene the JPY can continue to weaken. The risk of buying is that we buy into interventions, which means risks are high. POSSIBLE BULLISH SURPRISES Catalysts that push US10Y lower (less hawkish Fed, lower UC CPI , lower growth) could trigger bullish reactions from the JPY. Any catalyst that triggers meaningful downside in key commodities like Oil (deteriorating demand outlook, ease in supply shortage) could trigger bullish JPY reactions. Any additional intervention from the BoJ or MoF. Watch Core CPI on Friday. Any print above 3.4% would be the highest inflation in 40 years and could spark speculation of less dovish policy action from the BoJ and should be JPY positive. POSSIBLE BEARISH SURPRISES Any catalysts that push US10Y higher (more aggressive Fed, higher US CPI , better growth) could pressure the JPY. Catalyst that triggers meaningful upside in Oil (deteriorating demand, increased supply) could trigger JPY downside. Reluctance from BoJ and MoF for intervening around the 145 level in USDJPY could spark speculative buying. Watch Core CPI on Friday. If Core CPI prints below 3.4% and BoJ officials talk down the rise as mostly transitory it could add further pressure on the JPY. BIGGER PICTURE The fundamental outlook remains bearish for the JPY due to yield differentials and the impact of a weaker JPY on the current account balance. As long as US10Y remain elevated and the BoJ stays stubbornly dovish and no currency intervention occurs, the bias remains lower. But take note of positioning which means we don’t want to chase the JPY lower, especially with the risk of further currency intervention should the JPY continue to weaken. The best opportunities for now remain short-term focused on further intervention or strong moves lower in US yields.
by thunderpips
7
USD JPY - FUNDAMENTAL DRIVERSUSD FUNDAMENTAL OUTLOOK: BULLISH BASELINE With headline CPI above 8% and Core CPI seeing another acceleration in the SEP CPI data, the Fed is under pressure to continue hiking rates and ramping up QT. Markets expect another 75bsp hike in NOV and currently prices the terminal rate at 4.8%. The Fed is on a data-dependent (meeting-by-meeting) policy stance, meaning incoming growth, inflation and jobs data remains a key driver for short-term USD volatility where we expect a cyclical reaction with incoming data for both the USD and US10Y (good data expected to be supportive for the USD while bad data is expected to pressure the USD). Another choppy week for the USD finishing 0.5% stronger on the week but keeping a small range. With a quiet week ahead on the data side, the USD is most likely going to get most of it’s momentum from overall risk flows. POSSIBLE BULLISH SURPRISES With the Fed signalling a data dependent policy stance, we expect a cyclical reaction from the USD with incoming US data. Thus, extremely good growth, inflation or jobs data is expected to trigger short-term bullish reactions in the USD. If the cyclical outlook continues to weaken, the USD’s safe haven status still matters. Any incoming catalysts that increase deep recession fears and triggers strong moves lower in risk assets & bonds can trigger safe haven flows into the USD. With a lot priced for the Fed and USD, the bar is high for hawkish Fed surprises, but any aggressive Fed speak talking up a >5.0% terminal rate can trigger further USD upside. POSSIBLE BEARISH SURPRISES With the Fed signalling a data dependent policy stance, we expect a cyclical reaction from the USD with incoming US data. Thus, extremely bad growth, inflation or jobs data is expected to trigger short-term bearish reactions in the USD. If the cyclical outlook starts to improve, the USD’s safe haven status still matters. Any incoming catalysts that decrease deep recession fears and triggers strong moves higher in risk assets & bonds can trigger safe haven outflows out of the USD. With a lot priced in for the Fed and the USD, it won’t take much to disappoint on the dovish side. Any big concerns about growth from Fed speakers could trigger outflows. BIGGER PICTURE The fundamental outlook for the USD remains bullish as long as the Fed stays hawkish and cyclical concerns put pressure on risk sentiment. The data dependent stance from the Fed means that short-term data surprises can pull the USD either way and would be our preferred way of trading the Dollar right now. The calendar is extremely light in the week ahead, which means overall risk sentiment could be the biggest source of momentum (which means keeping a close eye on further equity and bond market sell offs). Keep in mind earnings season gets a bit mor exciting this week and will be important to watch for risk. JPY FUNDAMENTAL OUTLOOK: BEARISH BASELINE In recent weeks, yield differentials of course have been the biggest driver for the JPY with the BoJ keeping 10-year JGB yields capped at 0.25% with yield curve control while other central banks are hiking rates aggressively. Thus, right now the JPY is pressured as yields have soared for the sky, but the threat and risk of further intervention could keep weakness limited. Japanese authorities intervened in the FX market in September by buying JPY and selling Dollars for the first time since 1998. The intervention saw some short-term downside of USDJPY, but as of Friday USDJPY almost reached 149 without any sign of further intervention action. The bias for USDJPY remains higher fundamentally speaking as yield differentials are still very wide, so unless authorities actively intervene the JPY can continue to weaken. The risk of buying is that we buy into interventions, which means risks are high. POSSIBLE BULLISH SURPRISES Catalysts that push US10Y lower (less hawkish Fed, lower UC CPI, lower growth) could trigger bullish reactions from the JPY. Any catalyst that triggers meaningful downside in key commodities like Oil (deteriorating demand outlook, ease in supply shortage) could trigger bullish JPY reactions. Any additional intervention from the BoJ or MoF. Watch Core CPI on Friday. Any print above 3.4% would be the highest inflation in 40 years and could spark speculation of less dovish policy action from the BoJ and should be JPY positive. POSSIBLE BEARISH SURPRISES Any catalysts that push US10Y higher (more aggressive Fed, higher US CPI, better growth) could pressure the JPY. Catalyst that triggers meaningful upside in Oil (deteriorating demand, increased supply) could trigger JPY downside. Reluctance from BoJ and MoF for intervening around the 145 level in USDJPY could spark speculative buying. Watch Core CPI on Friday. If Core CPI prints below 3.4% and BoJ officials talk down the rise as mostly transitory it could add further pressure on the JPY. BIGGER PICTURE The fundamental outlook remains bearish for the JPY due to yield differentials and the impact of a weaker JPY on the current account balance. As long as US10Y remain elevated and the BoJ stays stubbornly dovish and no currency intervention occurs, the bias remains lower. But take note of positioning which means we don’t want to chase the JPY lower, especially with the risk of further currency intervention should the JPY continue to weaken. The best opportunities for now remain short-term focused on further intervention or strong moves lower in US yields.
by thunderpips
6
USD JPY - FUNDAMENTAL DRIVERSUSD FUNDAMENTAL OUTLOOK: BULLISH BASELINE With headline CPI above 8% and Core CPI seeing acceleration in August, the Fed is under pressure to continue hiking rates and ramping up QT. The bank made its third 75bsp at the Sep meeting and pushed up their 2023 terminal rate projection to 4.6%. The Fed is on a data-dependent (meeting-by-meeting) policy stance, meaning incoming growth, inflation and jobs data remains a key driver for short-term USD volatility where we expect a cyclical reaction with incoming data for both the USD and US10Y (good data expected to be supportive for the USD while bad data is expected to pressure the USD). It was a choppy week for the USD, with entertaining ‘Fed Pivot’ narratives trying to make sense of the price action. In the week ahead, all eyes turns to the week’s main event which is Thursday’s September US CPI report. POSSIBLE BULLISH SURPRISES With the Fed signalling a data dependent policy stance, we expect a cyclical reaction from the USD with incoming US data. Thus, extremely good growth, inflation or jobs data is expected to trigger short-term bullish reactions in the USD. If the cyclical outlook continues to weaken, the USD’s safe haven status still matters. Any incoming catalysts that increase deep recession fears and triggers strong moves lower in risk assets & bonds can trigger safe haven flows into the USD. With a lot priced in for the Fed and the USD, the bar is high for hawkish Fed surprises, but any aggressive Fed speak talking up a higher than 5% terminal rate can trigger further USD upside. POSSIBLE BEARISH SURPRISES With the Fed signalling a data dependent policy stance, we expect a cyclical reaction from the USD with incoming US data. Thus, extremely bad growth, inflation or jobs data is expected to trigger short-term bearish reactions in the USD. If the cyclical outlook starts to improve, the USD’s safe haven status still matters. Any incoming catalysts that decrease deep recession fears and triggers strong moves higher in risk assets & bonds can trigger safe haven outflows out of the USD. With a lot priced in for the Fed and the USD, it won’t take much to disappoint on the dovish side. Any big concerns about growth from Fed speakers could trigger outflows. BIGGER PICTURE The fundamental outlook for the USD remains bullish as long as the Fed stays hawkish and cyclical concerns put pressure on risk sentiment. The data dependent stance from the Fed means that short-term data surprises can pull the USD either way and would be our preferred way of trading the Dollar right now. In the upcoming week markets will only have eyes for one data point and that will be the US September CPI data released on Thursday. With expectations of a higher Core CPI YY but expectations of a lower Headline CPI YY it seems risky to trade into this event. JPY FUNDAMENTAL OUTLOOK: BEARISH BASELINE Japan’s government finally had enough in the past week by intervening to sell USD and buying JPY for the first time since 1998 two weeks ago. Officials were smart enough to keep details low, which has left JPY sellers cautious of more intervention. In recent weeks, yield differentials of course have been the biggest driver for the JPY with the BoJ keeping 10-year JGB yields capped at 0.25% with yield curve control while other central banks are hiking rates aggressively. Thus, right now the JPY is pressured as yields have soared for the sky, but the threat and risk of further intervention could keep weakness limited. The currency intervention doesn’t solve all of the currency’s issues, but it also means there could be more safe-haven appeal for the JPY, so seeing how risk holds up after Friday’s flush across major asset classes will be important to watch. POSSIBLE BULLISH SURPRISES Catalysts that push US10Y lower (less hawkish Fed, lower UC CPI , lower growth) could trigger bullish reactions from the JPY. Any catalyst that triggers meaningful downside in key commodities like Oil (deteriorating demand outlook, ease in supply shortage) could trigger bullish JPY reactions. Any additional intervention from the BoJ or MoF. POSSIBLE BEARISH SURPRISES Any catalysts that push US10Y higher (more aggressive Fed, higher US CPI , better growth) could pressure the JPY. Catalyst that triggers meaningful upside in Oil (deteriorating demand, increased supply) could trigger JPY downside. Reluctance from BoJ and MoF for intervening around the 145 level in USDJPY could spark speculative buying. BIGGER PICTURE The fundamental outlook remains bearish for the JPY due to yield differentials and the impact of a weaker JPY on the current account balance. As long as US10Y remain elevated and the BoJ stays stubbornly dovish and no currency intervention occurs, the bias remains lower. But take note of positioning which means we don’t want to chase the JPY lower, especially with the risk of further currency intervention should the JPY continue to weaken. The best opportunities for now remain short-term focused on further intervention or strong moves lower in US yields.
by thunderpips
1
USD JPY - FUNDAMENTAL DRIVERSUSD FUNDAMENTAL OUTLOOK: BULLISH BASELINE With headline CPI above 8% and Core CPI seeing acceleration in August, the Fed is under pressure to continue hiking rates and ramping up QT. The bank made its third 75bsp at the Sep meeting and pushed up their 2023 terminal rate projection to 4.6%. The Fed is on a data-dependent (meeting-by-meeting) policy stance, meaning incoming growth, inflation and jobs data remains a key driver for short-term USD volatility where we expect a cyclical reaction with incoming data for both the USD and US10Y (good data expected to be supportive for the USD while bad data is expected to pressure the USD). It was a choppy week for the USD, with entertaining ‘Fed Pivot’ narratives trying to make sense of the price action. In the week ahead, all eyes turns to the week’s main event which is Thursday’s September US CPI report. POSSIBLE BULLISH SURPRISES With the Fed signalling a data dependent policy stance, we expect a cyclical reaction from the USD with incoming US data. Thus, extremely good growth, inflation or jobs data is expected to trigger short-term bullish reactions in the USD. If the cyclical outlook continues to weaken, the USD’s safe haven status still matters. Any incoming catalysts that increase deep recession fears and triggers strong moves lower in risk assets & bonds can trigger safe haven flows into the USD. With a lot priced in for the Fed and the USD, the bar is high for hawkish Fed surprises, but any aggressive Fed speak talking up a higher than 5% terminal rate can trigger further USD upside. POSSIBLE BEARISH SURPRISES With the Fed signalling a data dependent policy stance, we expect a cyclical reaction from the USD with incoming US data. Thus, extremely bad growth, inflation or jobs data is expected to trigger short-term bearish reactions in the USD. If the cyclical outlook starts to improve, the USD’s safe haven status still matters. Any incoming catalysts that decrease deep recession fears and triggers strong moves higher in risk assets & bonds can trigger safe haven outflows out of the USD. With a lot priced in for the Fed and the USD, it won’t take much to disappoint on the dovish side. Any big concerns about growth from Fed speakers could trigger outflows. BIGGER PICTURE The fundamental outlook for the USD remains bullish as long as the Fed stays hawkish and cyclical concerns put pressure on risk sentiment. The data dependent stance from the Fed means that short-term data surprises can pull the USD either way and would be our preferred way of trading the Dollar right now. In the upcoming week markets will only have eyes for one data point and that will be the US September CPI data released on Thursday. With expectations of a higher Core CPI YY but expectations of a lower Headline CPI YY it seems risky to trade into this event. JPY FUNDAMENTAL OUTLOOK: BEARISH BASELINE Japan’s government finally had enough in the past week by intervening to sell USD and buying JPY for the first time since 1998 two weeks ago. Officials were smart enough to keep details low, which has left JPY sellers cautious of more intervention. In recent weeks, yield differentials of course have been the biggest driver for the JPY with the BoJ keeping 10-year JGB yields capped at 0.25% with yield curve control while other central banks are hiking rates aggressively. Thus, right now the JPY is pressured as yields have soared for the sky, but the threat and risk of further intervention could keep weakness limited. The currency intervention doesn’t solve all of the currency’s issues, but it also means there could be more safe-haven appeal for the JPY, so seeing how risk holds up after Friday’s flush across major asset classes will be important to watch. POSSIBLE BULLISH SURPRISES Catalysts that push US10Y lower (less hawkish Fed, lower UC CPI , lower growth) could trigger bullish reactions from the JPY. Any catalyst that triggers meaningful downside in key commodities like Oil (deteriorating demand outlook, ease in supply shortage) could trigger bullish JPY reactions. Any additional intervention from the BoJ or MoF. POSSIBLE BEARISH SURPRISES Any catalysts that push US10Y higher (more aggressive Fed, higher US CPI , better growth) could pressure the JPY. Catalyst that triggers meaningful upside in Oil (deteriorating demand, increased supply) could trigger JPY downside. Reluctance from BoJ and MoF for intervening around the 145 level in USDJPY could spark speculative buying. BIGGER PICTURE The fundamental outlook remains bearish for the JPY due to yield differentials and the impact of a weaker JPY on the current account balance. As long as US10Y remain elevated and the BoJ stays stubbornly dovish and no currency intervention occurs, the bias remains lower. But take note of positioning which means we don’t want to chase the JPY lower, especially with the risk of further currency intervention should the JPY continue to weaken. The best opportunities for now remain short-term focused on further intervention or strong moves lower in US yields.
by thunderpips
6
USD JPY - FUNDAMENTAL DRIVERSUSD FUNDAMENTAL OUTLOOK: BULLISH BASELINE With headline CPI above 8% and Core CPI seeing acceleration in August, the Fed is under pressure to continue hiking rates and ramping up QT. The bank made its third 75bsp at the Sep meeting and pushed up their 2023 terminal rate projection to 4.6%. The Fed is on a data-dependent (meeting-by-meeting) policy stance, meaning incoming growth, inflation and jobs data remains a key driver for short-term USD volatility where we expect a cyclical reaction with incoming data for both the USD and US10Y (good data expected to be supportive for the USD while bad data is expected to pressure the USD). It was a choppy week for the USD, with entertaining ‘Fed Pivot’ narratives trying to make sense of the price action. In the week ahead, all eyes turns to the week’s main event which is Thursday’s September US CPI report. POSSIBLE BULLISH SURPRISES With the Fed signalling a data dependent policy stance, we expect a cyclical reaction from the USD with incoming US data. Thus, extremely good growth, inflation or jobs data is expected to trigger short-term bullish reactions in the USD. If the cyclical outlook continues to weaken, the USD’s safe haven status still matters. Any incoming catalysts that increase deep recession fears and triggers strong moves lower in risk assets & bonds can trigger safe haven flows into the USD. With a lot priced in for the Fed and the USD, the bar is high for hawkish Fed surprises, but any aggressive Fed speak talking up a higher than 5% terminal rate can trigger further USD upside. POSSIBLE BEARISH SURPRISES With the Fed signalling a data dependent policy stance, we expect a cyclical reaction from the USD with incoming US data. Thus, extremely bad growth, inflation or jobs data is expected to trigger short-term bearish reactions in the USD. If the cyclical outlook starts to improve, the USD’s safe haven status still matters. Any incoming catalysts that decrease deep recession fears and triggers strong moves higher in risk assets & bonds can trigger safe haven outflows out of the USD. With a lot priced in for the Fed and the USD, it won’t take much to disappoint on the dovish side. Any big concerns about growth from Fed speakers could trigger outflows. BIGGER PICTURE The fundamental outlook for the USD remains bullish as long as the Fed stays hawkish and cyclical concerns put pressure on risk sentiment. The data dependent stance from the Fed means that short-term data surprises can pull the USD either way and would be our preferred way of trading the Dollar right now. In the upcoming week markets will only have eyes for one data point and that will be the US September CPI data released on Thursday. With expectations of a higher Core CPI YY but expectations of a lower Headline CPI YY it seems risky to trade into this event. JPY FUNDAMENTAL OUTLOOK: BEARISH BASELINE Japan’s government finally had enough in the past week by intervening to sell USD and buying JPY for the first time since 1998 two weeks ago. Officials were smart enough to keep details low, which has left JPY sellers cautious of more intervention. In recent weeks, yield differentials of course have been the biggest driver for the JPY with the BoJ keeping 10-year JGB yields capped at 0.25% with yield curve control while other central banks are hiking rates aggressively. Thus, right now the JPY is pressured as yields have soared for the sky, but the threat and risk of further intervention could keep weakness limited. The currency intervention doesn’t solve all of the currency’s issues, but it also means there could be more safe-haven appeal for the JPY, so seeing how risk holds up after Friday’s flush across major asset classes will be important to watch. POSSIBLE BULLISH SURPRISES Catalysts that push US10Y lower (less hawkish Fed, lower UC CPI, lower growth) could trigger bullish reactions from the JPY. Any catalyst that triggers meaningful downside in key commodities like Oil (deteriorating demand outlook, ease in supply shortage) could trigger bullish JPY reactions. Any additional intervention from the BoJ or MoF. POSSIBLE BEARISH SURPRISES Any catalysts that push US10Y higher (more aggressive Fed, higher US CPI, better growth) could pressure the JPY. Catalyst that triggers meaningful upside in Oil (deteriorating demand, increased supply) could trigger JPY downside. Reluctance from BoJ and MoF for intervening around the 145 level in USDJPY could spark speculative buying. BIGGER PICTURE The fundamental outlook remains bearish for the JPY due to yield differentials and the impact of a weaker JPY on the current account balance. As long as US10Y remain elevated and the BoJ stays stubbornly dovish and no currency intervention occurs, the bias remains lower. But take note of positioning which means we don’t want to chase the JPY lower, especially with the risk of further currency intervention should the JPY continue to weaken. The best opportunities for now remain short-term focused on further intervention or strong moves lower in US yields.
by thunderpips
3
USDJPY: Almost There! 🇺🇸🇯🇵 Last week was very bullish for USDJPY again. The market is closer and closer to the local highs. I believe that the price may go higher. The structure that is on focus is 147.0 - 147.7 area based on 1998's low. The pair will most likely manage to reach that and a correctional movement may initiate then. Be very careful! ❤️If you have any questions, please, ask me in the comment section. Please, support my work with like, thank you!❤️
Short
by VasilyTrader
13
Today’s Notable Sentiment ShiftsJPY – The Japanese yen soared across the board on Thursday after monetary authorities intervened in the foreign exchange market to boost the battered currency for the first time since 1998. Nevertheless, despite JPY’s immediate uptick, analysts doubt Japan will be able to sustain a pronounced recovery in the safe-haven. Indeed, commenting on monetary policy divergence between the BoJ and other major central banks, Wells Fargo argues: “Over the next three to six months or possibly even longer, as long as those diverging paths of monetary policy are still in place and those differences persist, you’ll continue to see a weaker yen.”
by thunderpips
1
JPY Jumps As Japan IntervenesThe European session saw the release of both the SNB's and BoE's latest monetary policy decisions. The SNB announced a 75 basis point hike, taking the Policy Rate to 0.50%, while the BoE announced a 50 basis point rate hike, taking the Offical Bank Rate to 2.25%. As the SNB and BoE faced outside bets for more aggressive rate hikes, and both failed to provide any particularly hawkish rhethoric beyond expectations, CHF and GBP weakened after their respective central bank announcements in a buy the rumour sell the fact fashion . Elsewhere, JPY has come into focus, with the currency rapidly appreciating across the board. USDJPY tumbled over 500 pips to below the 141.00 handle and GBPJPY to below the 160.00 handle. Strength in the safe-have is the direct results of intervention in the currency by Japanese authorities, who have warned of such action over recent months due to the speed and size of JPY's recent decline. This is the first time Japan has intervened in the value of JPY since 1998. Looking ahead, today's US economic calendar is light on tier one data, keeping the market's focus on monetary policy, given the recent announcements from the FOMC, BOJ, SNB and BOE. Other ongoing themes to note are the prevailing risk tone, the global economic outlook and rising tensions between the West and Russia with regard to the invasion of Ukraine.
by thunderpips
2
Today’s Notable Sentiment ShiftsJPY – The yen rose over 1% on Wednesday after the Bank of Japan conducted a rate check, possibly in preparation for currency intervention. Summarising the market’s current view, CIBC stated: “Most market participants are on pins and needles awaiting whether or not we’re going to get any sort of intervention from the ministry of finance in Japan. It’s one of those things where we’ve seen comments so many times about the fact that they’re watching and monitoring the yen. The fact that they did a rate check overnight kind of indicates we’re in greater proximity toward intervention. But just intervention by itself we don’t think is going to be all that successful outside of an immediate knee-jerk reaction.”
by thunderpips
2
Dominant Currency Sentiment - JPY loses momentumThe market focus remains on JPY and the possibility of intervention by Japanese financial authorities. However, European market participants appear more sceptical. Indeed, ING analysts note: "Never say never. They have been stepping up the rhetoric lately. But I would be cautious about the inevitability of their intervening. Japan is a signatory to the G20 and they have got policies about not intervening." Similarly, the Norinchukin Research Institute's chief economist argues: "My feeling is that the MOF won't intervene at this stage and will leave it at verbal warnings. There's still a week before the Fed's rate-setting meeting. I don't think markets believe the ministry will intervene at current dollar/yen levels." Given the more sceptical stance market participants are now taking, JPY remains firmer on the day but has since lost the majority of its earlier momentum. Looking ahead, today's US economic calendar is light on tier one data, keeping the market's focus tilted towards JPY and the possibility of intervention, alongside broader themes such as the prevailing risk tone. Focus will then shift towards economic data in the following Asia-Pacific session, with the release of New Zealand GDP and Australian employment.
by thunderpips
3