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Yen Gains Traction as Risk off Returns

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Yen Gains Traction as Risk off Returns

Tensions in Ukraine have generated interest in both the yen and the dollar which has driven many currency pairs into counter moves. New that the Chinese government has engineered a devaluation of the yuan is created market volatility that seems to be the plan of the Chinese government. Economic data released on Thursday in the US failed to reverse the risk off trade.

The People’s Bank of China reported that it has engineered the recent decline in the country’s currency as part of its efforts to prepare for wider trading range. By guiding the yuan lower, the government intends to punish speculators betting on a continued rise and to introduce greater two-way volatility into its trading.

US durable goods orders declined by 1% in January, which was slightly better than expected, but shipments were down 0.8% which came in worse than expected. Durable goods ex-transportation increased 1.1% in January. December durable goods were revised lower down 5.1% month over month. Jobless claims increased 14,000 to 348,000 for the week ending 2/22/14, which was worse than the 5,000 rise expected by economists.

chart-yen-gains-traction-risk-returns.png

The USDJPY moved lower and is poised to test support near an upward sloping trend line that connects the lows in October to the lows in February and comes in near 101.70. Momentum on the currency pair is flat as the MACD is barely printing in positive territory and there is no trajectory. Negative momentum is accelerating as reflected by the relative strength index which is an oscillator that measures momentum as well as overbought and oversold levels. The RSI is moving lower with price action and printing near 42, which is the lower end of the neutral range.

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