USD/JPY – Japanese yen dips below 111, BoJ core CPI next

The Japanese yen has edged lower in the Monday session. In the North American session, USD/JPY is trading at 111.33, up 0.09% on the day. On the release front, U.S Existing Sales dropped to 5.38 million, missing the estimate of 5.46 million. This was the lowest level since January. Japanese Flash Manufacturing PMI is expected to tick up to 53.2 points.

The yen posted slight gains on Monday but was unable to consolidate. The brief gains were in response to a report that the Bank of Japan was considering changes to its monetary policy, in particular, its interest rate targets. This has raised speculation that the Bank could be making plans to reduce its massive stimulus program. Japan’s 10-year yield climbed to 5-month high on Monday in response to the report. If there are further signals from the BoJ that policymakers are considering reducing stimulus, the yen could move higher.

It was a strong week for the yen, as USD/JPY declined closed to one percent. The U.S. dollar was broadly lower on Friday after U.S President Trump made comments critical of Federal Reserve monetary policy. U.S presidents traditionally do not comment on moves by the Fed, but that did not prevent Trump from tweeting on Thursday that “tightening now hurts all that we have done”. On the weekend, Treasury Secretary Steven Mnuchin engaged in damage control, saying at the G-20 meeting that Trump was not interfering with the Fed policy of gradually raising rates. However, investors weren’t buying Mnuchin’s apologetics, and the U.S dollar continued to lose ground in Monday’s Asian session. There was more for investors to fret over, as Trump also attacked the EU and China for manipulating their currencies and keeping interest rates lower. This has raised concerns that the current global trade war could be followed by a currency war.

  Dollar weaker at the start of the week as G-20 comments on trade wars

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  BoJ easing talk sends bond yields up

Monday (July 23)

• 10:00 US Existing Home Sales. Estimate 5.46M. Actual 5.38M
• 20:30 Japanese Flash Manufacturing PMI. Estimate 53.2

Tuesday (July 24)

• 1:00 Japanese BoJ Core CPI

*All release times are DST

*Key events are in bold

USD/JPY for Monday, July 23, 2018

USD/JPY July 23 at 11:10 DST

Open: 111.43 High: 111.51 Low: 110.75 Close: 111.33

USD/JPY Technical

USD/JPY edged lower in the Asian session. The pair reversed directions and moved higher in the European session and has posted small gains in North American trade

• 111.22 was tested earlier in support. It is a weak line
• 112.30 is the next resistance line

Further levels in both directions:

• Below: 111.22, 110.21 and 109.21
• Above: 112.30, 113.75, 114.73 and 115.51
• Current range: 111.22 to 112.30

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