USD/JPY gains on back of Donald Trump’s speech
The greenback recovered past ¥109.00 after US President Donald Trump’s speech, and has remained above this level throughout Wednesday US time.
The USD/JPY rebounded 0.69% on Wednesday (08 January) late-morning US time, following US President Donald Trump’s speech at the White House in which he stated that Iran ‘appears to be standing down’.
In his speech at the White House, President Trump did not indicate any further military action. He said: ‘No Americans were harmed in last night's attack by the Iranian regime.’
The greenback sunk almost 0.72% to a 12-week low of ¥107.66 overnight on Tuesday (07 January), after Iran reportedly launched two attacks on US military bases in Iraq,
The Iranian counterattack came four days after the US killing of the country’s top military official, Major General Qassem Soleimani.
Prior to that, the currency pair had already begun to rally, due to the attacks not being as significant as first though, wrote IG UK Senior Market Analyst Joshua Mahony.
He added that a rise through Tuesday’s (07 January) peak of ¥108.63 ‘would provide a more bullish short-term view as the pair retraces the wider sell-off from ¥109.71’.
However, there is still a ‘good chance’ that there will be more dips in line with the current trend of lower highs and lows, should that barrier not be broken, he further noted.
Going by that prediction, with the major forex pair currently trading at ¥109.244 as of 09 January, 12.50am EST, a bullish trend looks to be in motion.
IG data supports this sentiment, with a 12% daily increase in the number of short trades, and a three percent drop in long trades.
Focus now on US jobs report
With fears of US-Iran conflict escalation now allayed – assuming the White House maintains its current defence stance - analysts say the focus is now on the US government’s jobs report for the month of December on Friday.
ING Chief International Economist James Knightley wrote that the November report showed job creation was better than expected, but ‘slower growth is likely in December’.
‘Moreover, labour market slack is greater than implied by the unemployment alone, meaning wage growth will remain subdued. The net result implies little upside threat for interest rates,’ he added.
Analysts at AceTrader FX said short-term impact on price movement is also a possibility in the lead up to the release of the report, as several interviews with Fed officials are expected.
IGA, may distribute information/research produced by its respective foreign affiliates 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.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. 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, and 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.
Please see important Research Disclaimer.
Start trading forex today
Trade the largest and most volatile financial market in the world.
- Spreads start at just 0.6 points on EUR/USD
- Analyse market movements with our essential selection of charts
- Speculate from a range of platforms, including on mobile
Live prices on most popular markets
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.