Why Is the Yen So Weak?

By Han Tan Chief Market Analyst at Exinity Group

Last Tuesday, USDJPY posted its biggest single-day climb since November 2020, only to then take a breather for the time being.

(Note: weaker Yen versus the US dollar = USDJPY climbs higher).

USD/JPY Daily chart

The last time USDJPY traded at these levels just below 130, Eminem had just released his hit 2002 track, “Without Me”.

In fact, JPY is the worst performer against the US dollar amongst all G10 currencies … by far.

And the Yen’s woes aren’t just limited to its performance against the US dollar alone.

Consider how the JPY Index has weakened by almost 9% so far this year.

JPY Index daily chart

This index comprises a basket of currency pairs measuring the Yen against its G10 peers, all in equal weights:

NZDJPY
GBPJPY
CHFJPY
EURJPY
AUDJPY
USDJPY

The Yen also has a year-to-date decline against all its major Asian counterparts as well.

So why is the Yen so weak?

The main reason is because of monetary policy divergence.

Let’s break it down.

Firstly, monetary policy is the way a central bank achieves its goals for the economy (e.g. maximum employment, stable prices, etc.), using tools like interest rates, money supply, and even currency levels.

And where’s the divergence?

The Bank of Japan is still using its monetary policy to support its economy.

This is in stark contrast to what most other central banks around the world are doing = pulling back that support. They do this by raising interest rates/easing back on bond purchases.

The goal of such policy-tightening (not what the BOJ is doing) is to reduce money supply and demand levels in an economy = less money chasing after scarce goods = to lower consumer prices/inflation.

Monetary policy: Comfort food vs. a regular diet

Consider when a child is feeling down, his/her parents may have no qualms treating the child to some ice cream, candy, or chocolate bars.

Such sweet indulgences are meant to make the child feel better in a jiffy, but is (hopefully) just a short-term fix and also (again, hopefully) far different from the regular diet the child consumes as part of the daily routine.

Similarly, when the economy was suffering during the pandemic, central banks rolled out record-low interest rates and printed money out of thin air to keep financial markets supported.

Low interest rates = cheaper for households/businesses to borrow money = they have money to spend in the economy = the economy gets better

But now that economies are recovering and even posting red-hot inflation numbers, it no longer needs record-low interest rates and unlimited bond purchases

Hence, central banks are returning to their economy’s “regular diet” by tightening policy = paring down bond purchases/reducing the supply of money in the economy/raising interest rates.

Who’s already hiking rates?

Within the G10 space alone:

  • Bank of New Zealand – raised its benchmark rate by 125 basis points (1.25%) since Q3 2021
  • Bank of Canada – raised its benchmark rate by 75 basis points so far this year
  • Bank of England – raised its benchmark rate by 65 basis points since December
  • US Federal Reserve – raised rates by 25 basis points in March, perhaps another 50-basis point hike in May

But not so the Bank of Japan.

It’s keeping Japan’s benchmark interest rate at a record low of negative 0.1%, while buying up even more bonds.

Hence, the divergence in monetary policy.

How is policy divergence playing out in markets?

This divergence is evident in the widening gap in yields between Japanese bonds and its global counterparts.

Firstly, what are yields?

Yields are a way to measure how much money you could earn on an investment over a set period of time.

In the case for bonds, it’s calculated in terms of how much interest one would get paid if they held on to that bond till it matures/reaches the end of its tenure.

For context, bond yields have been climbing around the world.

This is because investors are selling off bonds in tandem with central banks that are reducing their balance sheets.

And when bond prices drop, their yields rise.

Here are the benchmark 10-year yields for these other countries (at the time of writing):

US = 2.88%
Canada = 2.87%
China = 2.82%
UK = 1.95%
Germany = 0.89%

Contrast the numbers above with Japan’s 10-year yields, which are capped at 0.25%.

As a policy, the Bank of Japan is buying even more bonds to keep bond prices elevated and limit its benchmark 10-year yields to no higher than 0.25% (this process is also known as “yield curve control”).

The goal for capping those yields is to keep borrowing costs low in Japan so that households/businesses can still borrow to stimulate the economy.

Government bond yields are often used as the benchmark by which other banks/financial institutions calculate the interest to charge the customers who borrow money.

Here are two charts that show how the widening gap/spread between US benchmark yields vs. Japan’s benchmark yields (10-year government bonds) correspond with the USDJPY’s performance:

US vs JPY yields spread and USD/JPY

See how those two lines are moving in sync with one another?

In essence, the wider the gap between US and Japan’s yields, the higher USDJPY goes (the weaker the Japanese Yen against the US dollar).

How are Japan’s capped yields affecting the yen?

The lower yields on offer in Japan suggests that investors would get more bang for their buck by buying bonds in other countries that are now posting higher yields (again, yields in this case are a measure of how much one could earn from investing in that particular bond).

At risk of oversimplifying matters:

Less demand for Japanese assets = less demand for the Japanese yen.

And when there’s lower demand = prices fall (all else equal).

Hence, the Yen has been falling as investors shun Japanese bonds.

From a fundamental perspective, markets are getting the sense that the Japanese economy is still too fragile – or at least the Bank of Japan thinks so of its own economy – and is nowhere near strong enough to be able to do without the ‘comfort food’ from the central bank.

But of course all that could change, as the BOJ faces increasing pressure to follow suit with other central banks in tightening policy … or perhaps even just to stem the Yen’s weakness.

Which brings us to the final question to ponder upon for this article …

Will the Yen eventually rebound?

As a market cliche goes … nothing lasts forever.

So yes, theoretically the Yen could eventually rebound.

But one of two things may need to happen first:

1) The Bank of Japan has to signal that its willing to abandon its ultra-loose monetary policies.

Policymakers need to be convicted that Japan’s economic recovery is sustainable, and that inflation is being fuelled by robust demand (a.k.a. demand-pull inflation) as opposed to cost-push inflation.

To be clear, this seems unlikely for a while more, at least through the end of 2022.

Still, look out for the Bank of Japan policy meeting next week (April 28th).

The slightest clue that the BOJ is ready to tweak its policy stance could trigger a big move in the Yen.

2) Policymakers intervene to curb Yen weakness

This has been done before, but not for quite some time.

The last time the Japanse government propped up the yen was back in 1998, when USDJPY traded above 140 and peaked at 147.66 in September 1998.

However, back in 2002 even when USDJPY surpassed 135, the government sat on its hands and didn’t intervene.

So it remains to be seen at what level Japanese policymakers will tolerate before trying to stop the Yen from weakening further.

Keep in mind that a drastically-weaker Yen causes its own problems for the economy.

Japan is a net importer of energy, which are widely denominated in US dollars. The weaker Yen forces Japan to spend more of its currency to buy the same amount of fuel, not to mention the other imported goods (e.g. food) and services that it now has to spend more money on. If the imported costs become too great and weigh on businesses/households, then the Japanese government may be forced to pay for subsidies to ease the pain.

That’s money out of the Japanese government’s pocket that could be spent on other things.

So until either of the above scenarios happen, shorting the Yen has remained a popular bet.

Last week, asset managers raised their short bets on the Yen to the most ever on record, according to CFTC data.

Overall, as long as this policy and yields divergence continues to play out between Japan and other major economies, that’s likely to keep the Yen on its weakening path for longer.

That is, unless the BOJ or Japan’s Finance Ministry switches tact and, in intervening to halt the Yen’s weakness, might do so while singing lines from Eminem’s monster hit from 2002 …

“Now this looks like a job for me
So everybody, just follow me
‘Cause we need a little, controversy
‘Cause it feels so empty, without me”

Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.

Forex, Commodities and Stock Indices Analysis: Yen Weakens Again

Global Financial Markets Technical Analysis

Monday is definitely a bad day for the Japanese Yen. Sell-off accelerates

SP500 is still inside of the wedge correction pattern. A long-term bullish sentiment remains intact

USDJPY is trading above the long-term neckline of a giant inverse head and shoulders pattern

CHJPY climbs higher after escaping the ascending triangle to the upside

NZDUSD cancels the inverse head and shoulders pattern

EURGBP still flirts with the 0.83 support. Looks like sellers will try a breakout one more time

Gold climbs higher after the bullish breakout from the symmetric triangle

Brent oil breaks the long-term up trendline. The next major support on the 86 USD/bbl.

Traders Edge: Market Briefing Video 11.04.22

For a look at all of today’s economic events, check out our economic calendar.

New Week Starts With Gentle Correction on the Major Indices

Major Financial Markets Technical Analysis

Last week ended with a small correction on indices. The SP500 didn’t manage to hold above the 4590 points but the long-term bullish trend remains intact.

DAX also enters the correction phase. Small head and shoulders underway. A bigger correction can start when sellers break the neckline.

EURUSD continues trading inside of the flag pattern. Soon, sellers should be able to test the lower line of this formation.

EURGBP drops after failing to secure the neckline of the iH&S formation.

USDJPY has a dangerous shooting star on a crucial resistance. Despite that, buyers remain strong.

Gold continues trading sideways. Symetric triangle emerges so we have to wait for the breakout.

Brent Oil also stays inside of the triangle. Currently, we’re testing its lower line, so a breakout is possible.

The same goes for CHFJPY, but here the breakout is really close, and could possibly happen today.

Traders Edge: Market Briefing Video 04.04.22

For a look at all of today’s economic events, check out our economic calendar.

Gentle Risk on Mode at the Start of the Week

American futures started a little bit higher than Friday’s close, showing moderate optimism, which probably is associated to the small steps forward made during negotiations

DAX, on the other hand, is doing much better, continuing the bullish reversal started on March 8th. As long as we hold above the 38,2% buyers can be quite optimistic.

Gold and silver reverse to the downside, going in line with this subtle risk on mode, seen on stocks right now.

Brent oil defending the neckline of the H&S formation. Breakout would be great for all the drivers around the world.

EURUSD continues the bounce from the lower line of the symmetric triangle pattern.

EURGBP continues the upswing after the false bearish breakout of the 0.83 support.

USDCHF escaped to the upside from the long-term symmetric triangle pattern.

CHFJPY is doing pretty much the same, but here we also deny the H&S formation.

For a look at all of today’s economic events, check out our economic calendar.

Two Safe Havens, the CHF/JPY, Close to a Major Sell Signal

The main Forex market story today is for sure the unprecedented drop of the Russian Ruble. Hard to say how big as it varies. Over the weekend, in some banks, the exchange rate was even 150 for 1 USD. That’s really unbelievable. We will leave this currency today and move towards safer ones. Actually, two currencies, the CHFJPY.

CHF/JPY Daily chart

The CHFJPY is in a rather bearish situation on the chart. What we can see now is the massive Head and Shoulders pattern (yellow). The price is above the neckline (red) and all we need for a proper sell signal is the breakout of this dynamic support. If that breakout happens, the sentiment would turn negative and the potential target for the drop would be the green horizontal support at 122.5.

In case that isn’t enough and the drop continues, the next target would be the black long-term up trendline, which connects higher lows since May 2020. All that is a negative scenario and again, it will be on the table only if the price breaks the red neckline. As for now, we are still above, so buyers are still ahead.

For a look at all of today’s economic events, check out our economic calendar.

American Dollar Still Sleepy, Waiting for a Breakout

Santa is here, even after Christmas. Indices continue the movement to the upside. Many major indices are currently flirting with all-time-highs.

Dollar Index continues trading inside of the pennant formation. Breakout should happen really soon.

Of course a very similar situation can be spotted on the EURUSD, where the price is slowly approaching the end of this sideways movement.

GBPUSD is enjoying the bounce from the 38,2% Fibo and the lower line of the flag formation.

Almost the same is happening on the NZDUSD but here buyers are more cautious and the bullish momentum is not as admirable as on the Cable.

CHFJPY is enjoying the upswing after the price was locked between Fibos for almost six weeks. Great example of what happens when the price eventually escapes from the sideways trend.

Silver is not bothered by the stronger USD and is aiming for the long-term dynamic resistance.

Gold is doing slightly worse. The shooting star on a daily chart can especially be a problem for buyers.

Oil broke a major horizontal and dynamic resistance. Sentiment with that is definitely bullish.

For a look at all of today’s economic events, check out our economic calendar.

Dollar Drops Before Christmas

Indices climbed higher after another V-shaped reversal.

The dollar Index bounced off the lower line of the pennant. Sideways movement continues but the end is near.

The GBPUSD bounced nicely from the 38,2% Fibonacci. Finally!

The same goes for the NZDUSD. The triple bottom formation looks complete.

The USDCHF completely lost momentum. Watching paint dry is actually more interesting than trading the USDCHF.

The EURNZD continued the reversal to the downside after the false breakout pattern from the beginning of the week.

The CHFJPY finally escaped from the weeks-long sideways trend. The breakout is to the upside.

The CADCHF reversed and created a false breakout pattern and is ready for a further rise.

Silver defended its 22 USD level. A great success butt there’s still a lot of work for buyers to do.

GBP/USD and NZD/USD Rise From the Death!

USD loses traction and allows other currencies to catch some breath. On many pairs, this initial reversal is happening in very interesting places.

GBPUSD is bouncing from the lower line of the flag and the 38,2% Fibonacci with a beautiful inverse head and shoulders pattern. The neckline is already broken, so the buy signal is ON.

A similar situation can be seen on the NZDUSD but here, instead of the iH&S, we have the triple bottom formation.

EURUSD is bouncing from the lower line of the pennant.

GBPJPY defends a crucial horizontal support and aims higher.

USDCHF still waits for the breakout from the symmetric triangle pattern. Currently we are in the middle.

AUDCHF aims higher after the price makes a V-shaped reversal after touching the lower line of the flag.

CHFJPY continues another week inside of the rectangle, between the 23,6% and 38,2% Fibonacci.

CADCHF is attacking a long-term horizontal support. A breakout can bring us a proper sell signal.

For a look at all of today’s economic events, check out our economic calendar.

Waiting for the Bigger Movement on the USD

DAX ends the flag and tries to aim higher.

Nasdaq is about to test an absolutely crucial horizontal resistance. A bullish breakout will mean a proper buy signal.

Dollar Index is inside of a pennant, waiting for a breakout.

The same with the EURUSD.

GBPUSD bounces from the lower line of the flag and 38,2% Fibonacci but the momentum could have been higher.

USDCHF is still inside of the long-term symmetric triangle, waiting for the breakout like the Dollar Index.

CHFJPY is still locked between two important Fibonacci retracements. The rectangle continues.

CADCHF is also inside of the lock-term triangle. This week may result in a test of its lower line.

For a look at all of today’s economic events, check out our economic calendar.

Indices Try to Correct Lower and EUR/USD to the Upside

SP500 reaches an important resistance and creates a head and shoulders pattern on the lower timeframes. The neckline isn’t broken yet, so buyers can still chill.

DAX is correcting a recent surge inside of a flag formation.

Silver is raising pressure on a long-term horizontal support.

EURJPY with a false bearish breakout is ready for a new bullish wave.

CHFJPY is locked inside of the rectangle between two Fibonacci’s: 23,6% and 38,2%.

EURUSD is trying to initiate the reversal with an inverse head and shoulders pattern but is still trading below the neckline.

GBPUSD is still under heavy selling pressure but may use the 38,2% Fibo in order to create some kind of a bounce in those oversold conditions.

For a look at all of today’s economic events, check out our economic calendar.

EUR Starts a Correction, NZD Flexes Muscles

Gold stays strong and enjoys a rather flat correction, which indicates a bullish power.

Silver tests the neckline of the iH&S pattern and defends it with a nice upswing, which is also very optimistic.

EURNZD drops after testing the crucial dynamic support as the newest resistance.

AUDNZD drops sharply after the price makes the false breakout above three major resistances.

CHFJPY reaches 38,2% and bounces higher – a classical movement for price action traders.

USDCHF tests the upper line of the symmetric triangle pattern and creates a shooting star on the daily chart, which is rather negative.

EURUSD bounces from the 61,8% Fibonacci with a pin bar, this may be the start of a bullish correction.

EURPLN continues the upswing driven by the bullish breakout from the ascending triangle pattern.

For a look at all of today’s economic events, check out our economic calendar.

Gold, Stocks and USD Do Not Stop Gaining Momentum

Gold continues the upswing coming from the inverse Head and Shoulders pattern.

Silver is as well, but here we’re experiencing a flat correction in the form of a pennant.

DAX ends another flat rectangle and makes new all-time highs.

EURJPY breaks the last important Fibo line and enters the bear market.

AUDNZD breaches the horizontal resistance and aims higher.

CHFJPY drops, driven by a very handsome Head and Shoulders pattern.

USDCHF is inside of a giant symmetric triangle pattern. We’re currently aiming at its upper line.

EURUSD continues the long-term descend. The Head and Shoulders pattern is in play here as well.

GBPUSD is still relatively safe as here we are still inside of the flag formation.

EURPLN is breaking the upper line of the ascending triangle pattern.

For a look at all of today’s economic events, check out our economic calendar.

Silver and Gold Do Not Ease the Tempo

Definitely, the main story for most traders is the buy signal on precious metals. This is no surprise, and if you’ve been following Trader’s Edge, you’ll know that I’ve been expecting this for quite some time.

Gold created a very handsome inverse head and shoulders pattern, which created enough bullish momentum to break crucial horizontal and dynamic resistances. We may experience a pullback but the buy signal is here to stay.

Silver made an even better iH&S formation. We already broke the neckline of this pattern and the positive sentiment is all over the place.

SP500 looks positive and the correction from the previous week is probably only a memory now.

DAX is climbing higher, making stairs so flat horizontal corrections. New all-time highs are pretty close.

EURJPY is defending the last important support. Once it’s gone, any positive sentiment will be gone too.

EURNZD is showing us the power of the bearish trend and also the power of a false breakout.

AUDNZD is aiming few important resistances inside of a wedge pattern. This can end with a massive drop.

CHFJPY is showing us two head and shoulders patterns. One is already fulfilled. The second one’s in progress…

For a look at all of today’s economic events, check out our economic calendar.

Gold Will Soon Test The Crucial Resistance

Indices start the new week on the front food, drawing another bullish candle on the daily chart. On the SP500 it starts to look a bit ridiculous to be honest with you.

Dax is more modest, inside of a mid-term trend continuation pattern. Of course breakout to the upside seems more probable.

I guess the star of today is gold, which is climbing higher towards the crucial resistance of 1835 USD/oz. This is where the great battle will probably take place.

Silver is also advancing higher, creating the right shoulder of the iH&S pattern

USDJPY is going lower after breaking the crucial horizontal support, which happened after the bearish escape from the triangle.

EURCHF has a promising triple bottom formation.

AUDNZD collapses after the beautiful Head and Shoulders pattern.

The same applies to the CHFJPY.

For a look at all of today’s economic events, check out our economic calendar.

Dollar Comes Back to The Bearish Trend. Gold and Silver Rise

  • Jerome Powell buried the USD, helped precious metals and as almost always…stocks
  • U.S. dollar index breaks the lower line of the channel up formation and goes down
  • Silver comes back inside of the symmetric triangle pattern, that’s bullish
  • Gold climbs higher
  • The NZDJPY is creating an inverse head and shoulders pattern on an important support
  • The CHFJPY goes higher after a very handsome technical setup, which we discussed in our previous video
  • The EURUSD with a false bearish breakout of a neckline, that’s super bullish
  • The USDCAD goes down as expected. Shooting star on a weekly chart is no joke
  • Indices push higher, same thing, different day

NZD Is Ready to Flex Muscles Again

There’s an excellent long-term setup on the CHFJPY, where we are finishing a bearish correction. The price is bouncing from the combination of a horizontal and dynamic support and everything seems ready for another bullish wave.

The AUDNZD is in a short-term sideways movement but with a long-term negative outlook.

The NZDCHF is in a perfect flag formation. For the buy signal, we need to see the breakout of the upper line of this pattern.

The NZDJPY is in a similar situation but here we additionally have a bounce from the horizontal support. The sentiment is positive.

Silver uses every chance to go lower. Currently, we are testing the long-term support of a symmetric triangle. The outlook is rather negative.

The dollar Index broke the neckline of the giant inverted Head and Shoulders pattern and yesterday it defended it as a support with a hammer candle. That is definitely a positive and optimistic sign for buyers.

For a look at all of today’s economic events, check out our economic calendar.

Exclusive: BOJ Seen Cutting This Year’s Growth Forecast as COVID-19 Curbs Hurt Outlook

But the central bank is likely to maintain its view the world’s third-largest economy is headed for a moderate recovery as robust exports and output offset some of the weakness in consumer demand, said four sources familiar with its thinking.

The expected downgrade highlights Japan’s struggle to contain the COVID-19 pandemic, as slow vaccine rollouts and a resurgence in infections force authorities to declare a state of emergency for Tokyo just 16 days before the Olympic Games begin.

“The foundations of a recovery are in place, but the timing may be delayed somewhat,” as the curbs weigh on the economy’s expected rebound in the current quarter, one of the sources said, a view echoed by three other sources.

In most recent forecasts made in April, the BOJ expected the economy to expand 4.0% in the current fiscal year ending in March 2022, higher than a 3.6% growth projected in a Reuters poll.

At its July 15-16 policy meeting, the BOJ will likely cut the current year’s growth forecast in fresh quarterly and inflation projections, the sources said. It is also widely expected to keep monetary settings unchanged.

In the new estimates, the BOJ will likely revise up this fiscal year’s consumer inflation forecast mainly reflecting the boost from recent rises in energy costs, the sources said.

The growth projections for next fiscal year ending in March 2023 will depend much on when households begin to feel safe enough to boost spending on leisure and travel, analysts say.

The central bank currently expects the economy to expand 2.4% next fiscal year and 1.3% the following year.

The BOJ estimates that households have 20 trillion yen ($182 billion) in “forced” savings accumulated last year due to stay-at-home policies, which could be tapped when vaccines are rolled out widely.

Japan’s economy shrank an annualised 3.9% in January-March and likely barely grew in the second quarter, as the pandemic took a toll on service spending.

Analysts and policymakers had expected the economy to enjoy a solid rebound in the latter half of this fiscal year, in part hoping that steady vaccinations and removal of curbs would spur pent-up demand for leisure and travel.

For a look at all of today’s economic events, check out our economic calendar.

($1 = 110.0400 yen)

(Reporting by Leika Kihara and Takahiko Wada; Editing by Shri Navaratnam)

 

Few FX Pairs Where We Are Still Waiting for a Breakout

First one is the GBPUSD pair, where the price is inside the flag formation, just below crucial long-term highs. Breakout to the upside, will give us a signal to buy.

The USDJPY pair is testing the lower line of the flag. Breakout should activate more sellers.

The EURGBP pair with a descending triangle pattern. Currently aiming its horizontal support.

The EURJPY pair testing the neckline of a big H&S pattern. That can result with a breakout.

The CHFJPY pair with a H&S pattern on a long-term resistance. Possibly an interesting trade for the sellers.

The AUDJPY pair is trying to break the upper line of the triangle but the first attempt looks bad. It is possible that a false breakout is happening right this moment.

The GBPJPY pair showing the beauty of price action. First two pennants and now very clean flag. Breakout to the upside can be a great buy signal.

For a look at all of today’s economic events, check out our economic calendar.

Dollar Gets Respite From Pick Up in U.s. Manufacturing Before Jobs Report

By Kevin Buckland

The dollar index, which measures the greenback against six rivals, hovered just below 90 after dipping to as low as 89.662 on Tuesday and approaching the lowest since Jan. 7 at 89.533.

Likewise, the euro traded at $1.2222 after pulling back from near a multi-month top overnight, when it climbed to $1.22545.

Investors were also watching out the trajectory of China’s recently bullish yuan. It was last at 6.3798 per dollar in offshore trading, after retreating from the three-year high of 6.3526 reached on Monday as policy makers took steps to cool its advance including raising banks’ FX reserve requirements.

Sterling also remained lower at $1.4160 after easing off a three-year high of $1.4250 reached Tuesday, while the Canadian dollar was at C$1.20590 per greenback after rallying to a fresh six-year peak of C$1.2007 overnight as oil rose.

“The direction of the dollar is definitely the focus,” said Shinichiro Kadota, senior currency strategist at Barclays in Tokyo.

“The market is split in its view” on whether current inflationary pressures will be transitory, like the Fed says it is, or persist long enough to force policy makers to taper stimulus and raise rates earlier than they have so far signalled, Kadota said.

“Even if inflation continues to overshoot, I think the Fed will continue to say it’s temporary, but the market won’t know for sure until fall, so we’re kind of stuck in this uncertainty.”

Over the near term, the euro and yuan will be key in determining if the dollar remains on the back foot or stages a rebound, he said.

On Tuesday, the Institute for Supply Management (ISM) said its index of U.S. manufacturing activity rose in May as pent-up demand amid a reopening economy boosted orders.

The dollar initially traded lower on the report, in which ISM said manufacturing’s growth potential continued to be hampered by worker absenteeism and temporary shutdowns because of shortages of parts and labor.

Those employment shortcomings will be front and centre of investors’ minds on Friday with the release of nonfarm payrolls numbers for May, after April’s much-weaker-than-expected reading sent the dollar index slumping 0.7% on May 7.

The index was mostly flat from Tuesday at 89.877, but still well off Friday’s high of 90.447, when a measure of U.S. inflation closely watched by the Fed posted its biggest annual rise since 1992.

========================================================

Currency bid prices at 100 GMT

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

Euro/Dollar

$1.2221 $1.2214 +0.06% +0.02% +1.2226 +1.2213

 

Dollar/Yen

109.6250 109.4800 +0.07% +6.07% +109.6350 +109.5250

 

Euro/Yen

133.97 133.73 +0.18% +5.55% +133.9900 +133.7000

 

Dollar/Swiss

0.8969 0.8972 -0.02% +1.39% +0.8974 +0.8968

 

Sterling/Dollar

1.4157 1.4150 +0.05% +3.62% +1.4162 +1.4147

 

Dollar/Canadian

1.2064 1.2072 -0.06% -5.25% +1.2076 +1.2058

 

Aussie/Dollar

0.7761 0.7754 +0.10% +0.89% +0.7769 +0.7750

 

NZ

Dollar/Dollar 0.7257 0.7253 +0.06% +1.07% +0.7259 +0.7249

 

 

All spots

Tokyo spots

Europe spots

Volatilities

Tokyo Forex market info from BOJ

 

(Reporting by Kevin Buckland; Editing by Shri Navaratnam)

USD/JPY Price Forecast – US Dollar Threatens 109 JPY

The US dollar rallied significantly during the course of the trading session on Thursday to test the top of the shooting star from the previous session, suggesting that we are going to try to break above it. If we do, that would be an extraordinarily bullish sign, and could send this market towards the ¥110 level again. This is probably not about the US dollar, but more or less about the Japanese yen as it is getting hammered by several different currencies right now.

USD/JPY Video 30.04.21

The 50 day EMA is currently offering support, and it does look like the market is respecting that. Furthermore, the 38.2% Fibonacci retracement level has offered support, and we did form a couple of hammers in that general area. That being the case, I think that the uptrend can continue, but if we were to break down below this hammers, that could open up a move down to the 200 day EMA.

Ultimately, I think that the Japanese yen is a currency that is going to be in trouble going forward, due to the lack of yield coming from the bond market. With this being the case, I do look to buy the dip in not only this pair but multiple other ones like the AUD/JPY, NZD/JPY, and even the lowly CHF/JPY pairs. With this being the case, I think that we have much further to go, and, in this pair, I suspect that ¥110 will be the next target if we can break above that shooting star.

For a look at all of today’s economic events, check out our economic calendar.