The Dollar rose against the Yen for a fifth successive session on Thursday as the recent economic data renewed expectations that US interest rates would hold steady for the next few months…
The Yen was again under global pressure as investors favored higher-return currencies over low-yielding after the Bank of Japan raised a key interest rate to a decade high of 0.5% and commented that future increases would be gradual.
News and Events:
The Dollar rose against the Yen for a fifth successive session on Thursday as the recent economic data renewed expectations that US interest rates would hold steady for the next few months. This week unexpected better than expected US Core Consumer Prices and the Minutes from the FOMC meeting reflected policymakers� concerns about inflation risks. San Francisco Fed President Janet Yellen said separately she still saw upside risks to inflation. Analysts think the Fed Reserve may now keep its policy on hold for some time. Dealers said investors are also focusing on Iran�s determination to enrich uranium in defiance of the United Nation.
Meanwhile, the Yen hit a record low against the Euro and fell against all major currencies after the Bank of Japan raised a key interest rate to a decade high of 0.5% and commented that future increases would be gradual. Analysts said that everybody seems to be negative on the Yen and there is very little suggestion the Carry-trades will unwind very soon. In fact, Japan is raising rates but gaps against major high-yielding currencies remain. The Yen was again under global pressure as investors favored higher-return currencies over low-yielding ones likes the Yen or the CHF. The Yen low value is still helping investors in Carry-trades; in which investors borrow Japan with low interest rate and then sell the Yen to buy higher-yielding currencies. Bank of Japan Governor Toshihiko Fukui repeated on Thursday that the Central Bank would raise interest rates gradually. He also told parliament that prices could fall. Analysts believe the BoJ would wait until the second half of this year before raising rates again. UsdJpy hit a one-week high of 121.64 in a fifth consecutive positive day. EurJpy rose 0.33% to 159.45 after hitting high of 159.65 intraday its highest since October 1998.
Today’s Key Issues:
Euro 9:00 GMT: February German IFO Business Climate expected 107.5 vs 107.9, Current Conditions 112.10 vs 112.80 and Expectations 103.2 unchanged.
GB 9:30 GMT: 4Q Gross Domestic Product 2nd release expected 0.8% unchanged (QoQ) and 3% unchanged (YoY)
GB 9:30 GMT: 4Q Private Consumption expected 0.8% vs 0.4% and Government Spending expected 0.7% vs 0.8%
US 20:35 GMT: Fed�s Yellen speaks on economic outlook in Sacramento
The Risk Today:
EurUsd is consolidating recent gains, holding above support at last Friday’s 1.3095 low. Only a move below 1.3050 would offset the actual upward tone. Also failure to maintain a foothold above 1.3074 former resistance would unlock 1.2990 (61.8% retracement of the 1.2865 to 1.3191 advance). However, the broader trend remains positive; a break of 1.3176 (61.8% retracement of the 1.3268 to 1.2865 decline) would open the way towards 1.3290.
GbpUsd remains in 1.9403 � 1.9750 trading for the past couple of weeks. Only a breakout from this range would mark the next key directional trend. A break of 1.9750 resistance (61.8% retracement of the 1.9917-1.9482 decline) is required to confirm the return of the bull trend.
UsdJpy cleared 121.30 former resistance and may easily overtake 121.60 level. The sentiment remains positive and now targeting 122.20 range top. On the downside, it would take a break of the Wednesday’s 119.71 reaction low to offset upward trend in the near term. 119.90 remains the key level.
UsdChf may correct to 1.2312 and possibly break down 1.2309 (38.2% retracement of the 1.1879 to 1.2575 advance). But as long as 1.2309 remains intact, we might look for a recovery to 1.2438 en route to 1.2477 resistance (61.8% retracement of the 1.2575 to 1.2312 decline).
Resistance and Support: