-1721296629.png)
USD Selling Pauses…For Now
The US Dollar is attempting to stabilise today on the back of heavy selling over recent days. In the aftermath of last week’s softer-than-forecast US inflation data, USD has been firmly offered as traders ramp up their near-term Fed easing expectations. Three consecutive monthly CPI declines has seen a seismic shift in market pricing for Fed rates through year end with traders now looking at an initial cut in September with at least one further cut in Q4.
Dovish Fed Commentary
Fed commentary on the back of last week’s CPI reading has fallen on the dovish side Powell was heard acknowledging the drop in inflation, citing the Fed’s confidence that inflation will ow return to target and signalled that the bank wouldn’t necessarily need to wait until CPI is back at target before cutting rates. Echoing these comments, Fed’s Waller yesterday said that the time for a rate cut is drawing closer, referencing recent jobs and inflation data.
BOJ/Fed Divergence
The sell off in USD has been most pronounced against JPY where BOJ tightening expectations are creating highly tradeable divergence between USD and JPY. According to the latest BOJ accounts data, the bank was seen buying around 7 trillion JPY last week in a bid to amplify the reaction lower in USDJPY. There is also speculation that the BOJ intervened again yesterday though initial data doesn’t seem to corroborate this view. Looking ahead today, focus will be on US unemployment data with risks of fresh weakness in USD if we see a higher figure.
Technical Views
USDJPY
The sell off in USDJPY has seen the pair breaking back below the 158.28 level and below the bull channel which has framed the move higher this year. While below here and with momentum studies bearish, focus is on a fresh push lower and a test of the 154.74 level next.
.png)
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.