Yen weakens, after BOJ Governor Ueda avoided giving any clues on whether the BOJ will raise interest rates next month.
USDJPY rose by +0.20% on Monday. The Yen weakened after Monday’s economic news showed that Japan’s September core machinery orders unexpectedly declined -0.7% m/m, weaker than expectations of +1.5% m/m. The Yen slumped further, as investors reacted to comments from Bank of Japan Governor Kazuo Ueda. The BOJ head reiterated that they will raise interest rates gradually, if the economy develops as expected, but gave no guidance on the timing of future rate hikes. Ueda also said they are mindful of various risks, including for the US economy.
The Yen recovered from its worst levels on Monday, after T-note yields gave up early gains and turned lower, a positive factor for the Yen. On Friday, the Yen had rallied over 1%, after Finance Minister Katsunobu Kato signaled possible intervention, if the currency depreciated too quickly. The warning came as the Yen dropped to an almost four-month low, driven by growing uncertainty about the BOJ’s rate hike plans.
Nonetheless, current market sentiment favors the Yen, as investors seek safe haven assets amid uncertainty over the global economic outlook.
The USD has lost some of its appeal due to expectations that the Fed will keep interest rates unchanged or even cut them in December by year-end 2024. Uncertainty surrounding the US budget negotiations has also contributed to a decline in confidence in the USD. Meanwhile, despite coming under pressure from the BOJ’s easing policy, the Yen has benefited from the relative stability of the Japanese market and its traditional role as a safe haven asset.
From a technical perspective, USDJPY’s intraday bias remains neutral for now. Another rise is favorable as long as 153.86 resistance which has turned into a support holds. A break of 155.34 will resume the rally from 139.57 towards 156.73 interim top. However, a strong break of 153.86 and the short-term rising channel will confirm the short-term top. In that case, the intraday bias will go back to the downside for 151.26 support or even further to 38.2% retracement of 139.57 to 156.73 pullback at 150.18.
Click here to access our Economic Calendar
Ady Phangestu
Market Analyst
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
