BoJ and Fed in focus

The greenback will be firmly in focus this week as the much-anticipated FOMC meeting is set to take place.

BoJ
Source: Bloomberg

After having gone through a fairly long period of outperformance, the rally in the greenback seems to have somewhat stalled – uncertainty and caution will become the dominant theme around the Fed meeting. Following recent concerns about global growth, some investors feel calls for the Fed to delay an end to the asset purchase program are warranted.

However, I feel this is unlikely, given the $15 billion left is merely a token amount and won’t make a major difference. On the other hand, some analysts have commented, saying that, if the ‘considerable time’ reference is removed, USD would be supported.

Buying pullbacks in USD/JPY

The pair I will be watching closely is USD/JPY as there is also plenty of data to look out for on the Japan end. Yen weakness was attributed to reports the BoJ sees a high possibility of inflation falling short. This puts Japan’s inflation readings at the end of the week in focus.

We also have the BoJ meeting on the same day, with some are speculating we could finally hear something different from the recent rhetoric we’ve grown accustomed to. USD/JPY has dropped back below ¥108 early in Asia and I am in favour of buying the dips this week. The 50% retracement of the October drop and the 50-day moving average come in around ¥107.64 – I feel there could be buying opportunities in that region.

Click to enlarge

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. 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. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.