Traders look for weaker yen

USD/JPY remains the currency pair to watch, with traders eyeing events on both sides of the equation.

yen
Source: Bloomberg

In the US, traders are awaiting results of the mid-terms, where republicans only need 6 seats to gain control of the Senate. At the same time, Republicans are likely to expand their majority in the House. This means investors are perhaps exercising some caution because of the uncertainty around how this will play out and what it will mean for the markets.

On top of that, we have ADP non-farm payrolls data, which is expected to show a print north of 200,000 yet again. Any indication that data is tracking well ahead of expectations is likely to be construed as hawkish. Results from the elections will be hard to interpret, though, and this probably means traders will be looking to react to a move in price action.

Recent highs could be retested

The pair remains sidelined in Asia, just holding its ground at ¥113.65. Following the recent big move in USD/JPY, it’s not surprising to see the pair take a breather. Through Asian trade we have monetary base data, average cash earnings releases, and BoJ Governor Kuroda speaks at 1.30pm.

Given this speech comes on the back of the BoJ action last week, it’ll be watched closely. Any hints of further easing could weaken the yen even further. In the near term, traders will be eyeing a retest of Monday’s highs above ¥114.00.

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.