Seven year high for USD/JPY

The main theme in the FX space was renewed USD strength as traders focused on US data and some comments by Federal Reserve (Fed) members.  

US Federal Reserve
Source: Bloomberg

Stanley Fischer and William Dudley both stressed the positive impact from the oil price drop in the mid-term. While everyone has been concerned about the impact of oil prices on inflation, they feel lower inflation from reduced oil prices is temporary.  Additionally, Fischer said the Fed is closer to removing the considerable time reference from its language. While Fischer could not give a precise estimate on the first rate rise, he reinforced that it should be data dependant. Construction spending jumped 1.1% and came in well ahead of an estimate of 0.6%. Most analysts expect the considerable time reference to be dropped at the December meeting where the Fed will also give updated projections.

Greenback likely to extend gains

USD/JPY was the biggest beneficiary of the renewed strength in the greenback. The pair traded as high as ¥119.29, its highest since July 2007. USD/JPY has remained steady in Asian trade and continues to hover around those highs. There is no data out of Japan at all today but you can never rule out Japanese officials making some comments, particularly as we head towards elections. Perhaps the bigger reaction will come from the USD side of the equation where we have more fedspeak along with the ADP non-farm payrolls reading. From a price action perspective, the momentum is extremely bullish. For traders already long, there is no reason to exit. Trailing stops is the best option in this situation and letting the position run. Meanwhile, for traders looking for fresh longs, pullbacks into the uptrend which comes in around 117.20 could be a good opportunity to get set on longs.

Click to enlarge

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen. 79% van de retailbeleggers lijdt verlies op de handel in CFD’s met deze aanbieder.
Het is belangrijk dat u goed begrijpt hoe CFD's werken en dat u nagaat of u zich het hoge risico op verlies kunt permitteren.
CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen.