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JAPAN: USDJPY Extends Recovery from Near 14-Month Lows

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  • Downside momentum for USDJPY rapidly lost steam on Monday, with moves sub-140.00 appearing to be well supported. Stronger-than-expected US Empire State manufacturing assisted the early US bounce and spot moved steadily higher in the aftermath. In a continuation of this trend, a firmer US advanced retail sales number and stronger-than-expected IP have supported a larger correction for USDJPY, with the pair printing as high as 142.00 in recent trade.
  • Price action on Monday may have been assisted by the lower volumes owing to both China and Japan being out for national holidays, and profit taking dynamics ahead of the Fed are likely to have exacerbated the rally during today’s session. Firm resistance is not seen until 143.95, the 20-day EMA.
  • Following the FOMC announcement, the Bank of Japan board is expected to leave its policy interest unchanged at 0.25% on Friday. Policymakers will continue to examine the impact of July's rate hike and volatile financial markets on economic activity and prices at the two-day policy-setting board meeting.
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  • Downside momentum for USDJPY rapidly lost steam on Monday, with moves sub-140.00 appearing to be well supported. Stronger-than-expected US Empire State manufacturing assisted the early US bounce and spot moved steadily higher in the aftermath. In a continuation of this trend, a firmer US advanced retail sales number and stronger-than-expected IP have supported a larger correction for USDJPY, with the pair printing as high as 142.00 in recent trade.
  • Price action on Monday may have been assisted by the lower volumes owing to both China and Japan being out for national holidays, and profit taking dynamics ahead of the Fed are likely to have exacerbated the rally during today’s session. Firm resistance is not seen until 143.95, the 20-day EMA.
  • Following the FOMC announcement, the Bank of Japan board is expected to leave its policy interest unchanged at 0.25% on Friday. Policymakers will continue to examine the impact of July's rate hike and volatile financial markets on economic activity and prices at the two-day policy-setting board meeting.