Fundamental analytics

The massive Japanese currency gains led to a weakening of USD dollar across the market

Today, all the attention of FOREX currency market is forwarded to the pair USD / JPY. The main Asian session FX pair USD/JPY is down throughout the trading day. The beginning of Asian trading session USD / JPY met at JPY112.75 levels, and at the beginning of the US trading session the pair was trading already at JPY111.57 levels, with minimum around JPY 111.26. Sales of the Japanese currency were triggered by fears that the Japanese regulator made the first steps to reduce the volume of long-term bonds purchased, and in general to a weakening of the support measures for the national economy. The US dollar finished last week around JPY113.00. Yesterday, USD/JPY declined to JPY112.65.

Further strengthening of the Japanese currency began today at European trading. USD / JPY passed the level of JPY112 almost unnoticed. The dollar broke through a 200-day moving average. The next obvious target is technical area of November last year lows. This is a round level in the zone JPY 111. For today, the decline in the pair USD / JPU was about 1%.

The European currency today feels more confident. In general, we see that the upward corrective impulse of USD dollar is exhaling. Eur/Usd pair approached the serious demand level, zone 1.1915-1.1930, where all conditions were created for the implementation of the upward momentum, with the aim of recent local highs of 1.2075. At the start of American session, EUR/USD was trading around 1.2000. The US dollar index is overbought for last days, the profit taking on this instrument will return the dollar index back to zone 91.60.

Yesterday after the markets closed, the API reported  11.2 million barrel drop in US oil inventories, almost three times as much as expected. This is the biggest decline in this time of year for almost two decades, and the reserves in Cushing for the first time in three years fell below 50 million barrels. The EIA data received today is considered to be more authoritative. Failure to confirm the API numbers can stimulate profit taking on the market.

In addition to the stock data, US also reports import prices, and they can give some idea of ​​tomorrow's producer price index. It will be reported on wholesale stocks for November, and they can help economists to fine-tune the forecasts for GDP in the fourth quarter. Nevertheless, the main data of the week are retail sales and the consumer price index on Friday. Three Fed presidents, Evans, Kaplan and Bullard are performing today as well. Now, the probability of March rate-hike by Fed is around 82%.


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