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

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.

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.