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USD/JPY: turning higher in Tokyo, bid up 10 or so pips so far

2018-7-5 10:33:22Market Analysis
USD/JPY: turning higher in Tokyo, bid up 10 or so pips so far

USD/JPY is turning higher in Tokyo, bid up 10 or so pips from 110.47 to 110.59 after a very quiet market overnight due to the US mid-week holiday for 4th July.  

Domestic developments have also been limited as well and there are no major releases scheduled ahead of Friday’s nonfarm payrolls and labour cash earnings data. However, there have been some comments from BoJ board member Harada that have maintained a bias toward continued accommodation. Harada was highlighting the need for additional easing in the event of a loss of momentum on inflation. 

Meanwhile, the yen stuck to a 25 pip range between 110.34/54 between European and NY markets but was left in a narrower range of just 10 pips in the NY session, expectedly so due to the holiday. While the cash US treasury market was closed, 10yr treasury futures yields rose slightly from 2.83% to 2.84%. There was a very brief bit of market excitement where bears were picking up some pips on the ECB headlines as the DXY deteriorated - a Bloomberg report was citing sources over ECB policymakers who are uneasy that markets are not pricing an interest rate hike before Dec 2019.

The week ahead:

On Thursday, we have the ADP private employment, initial jobless claims, ISM non-manufacturing index and the FOMC minutes. Then the market's attention will turn to not just the U.S. nonfarm payrolls data but also the Chinese tariff threat that kicks on the same day. 

USD/JPY levels

Valeria Bednarik, chief analyst at FXStreet explained that the pair is technically bearish according to the 4 hours chart, barely holding above flat moving averages:

"The pair has a strong static support area around 110.10/20, with a break below it opening doors for a steeper decline during the upcoming sessions."