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USD/JPY falls after BOJ meeting lifts yen

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USD/JPY opened the Asian session at 120.28 after breaking higher through the European and US sessions, as the USD continued its recovery from the post-US payroll number slump. USDJPY traded with an offered tone for most of the Asian morning session, as the USD eased across the board. USDJPY traded 120.09 at one stage and after bouncing to 120.20 it fell again when the BOJ left policy unchanged as expected. USDJPY traded down to 119.92 in the immediate wake of the 8-1 decision – market now waits on Kuroda news conference (last 119.83). USDJPY looks range-bound and not quite ready to make a sustainable break in either direction. While the BOJ will likely stay sidelined for the short-term and blame weak energy prices for low inflation – the market still expects them to retain an easing bias. The break above the key 19,800 level in the Nikkei could see decent follow-through and support the USD/JPY.

EUR/USD opened the Asian session at 1.0815 after falling hard despite steady to lower US yields. After trading at 1.0807 in early Asia – EURUSD retained a bid tone for the rest of the morning session and traded as high as 1.0843. The move up was due to short covering and broad USD weakness. EURUSD settled around 1.0840 heading into afternoon session. The USD-negative impact of last week’s poor US payroll data has completely faded and funds are looking for excuses to sell EUR/USD. Extremely low yields in Europe continue to encourage real money funds to buy USD even though market expects the Fed to be cautious in commencing their tightening cycle. EURUSD bids are camped around 1.0800 – where the 20-dma is found. Sellers are eyed 1.0885. EZ Retail Sales and German Industrial Output out later today – but main event will be the Fed Minutes.

GBP/USD opened on Wednesday at 1.4807 and traded a 1.4807-1.4839 range in Asia; last at 1.4834.

USD/CHF opened on Wednesday at 0.9658 and traded a 0.9636-0.9665 range in Asia; last at 0.9636.

AUD/USD opened Wednesday at 0.7634 and traded a 0.7632-67 range in Asia; last at 0.7655. Asia traded mostly ‘contra’ today after NY left the DXY up 1.2% at their close. AUDUSD managed modest gains after a day of strong outperformance on Tuesday when the RBA left interest rates unchanged at their April meeting. The washout from the RBA decision was that they would now move in May with the market building in a 74% chance of a rate cut. The more discerning analysts however suggested that the RBA is not too keen to cut (had every chance to do so yesterday) and are waiting to see what happens stateside. Last week’s US NFP data perhaps confused things ruling out a June Fed rate hike. Currency markets however quick to view the data as an aberration suggesting that pricing (December lift-off) in rates market out of touch with reality. Whatever the case it does seem that the RBA is in no rush to cut just yet and the local rates market may have it all wrong.

The post USD/JPY falls after BOJ meeting lifts yen appeared first on Forex Circles.

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