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The USD/JPY caught a fresh bid-wave against the American dollar in the early Asian morning, largely on the back profit-taking, after having hit fresh two-week lows at 111.88 levels in opening trades.
Last week, the yen fell to its lowest level in three weeks against the dollar on Friday amid speculation that the Bank of Japan could step up monetary easing measures at its upcoming policy review.
The traders sold-off the US dollar across the board on rebalancing their positions ahead of the crucial FOMC and BOJ monetary policy meetings. Meanwhile, thin markets prevail in the Asian session and a lack of relevant economic news, leaves the USD/JPY pair at the mercy of the sentiment around the oil and stock markets.
The USD/JPY met fresh supply and slumped to fresh twelve-day lows against the American dollar in late-Asia, after reports hit the wires that BOJ officials are said to discuss lending to banks at negative rate. The USD/JPY pair popped higher from near daily low to hit fresh almost two-week tops at 110.19 on the headlines release.
Overnight, the dollar trimmed losses against the other major currencies on Thursday, as markets digested remarks by European Central Bank President Mario Draghi and a mixed bag of U.S. economic reports.
The Asian markets also found support from the BOJ news, sending the Nikkei into the green territory, which further supports the upside rally in the major.
Markets digest the BOJ headlines in wake of next week’s Fed and BOJ monetary policy decisions. Yen was steady to stronger in Asia on Friday as investors await next week’s review of interest rates by the Federal Reserve.
USD/JPY – 108.11… Dlr ‘gap-down’ opened below Fri’s NY low of 108.60 to as low as 107.75 (Reuters) in NZ this morning on broad-based buying in yen for risk aversion after an earthquake of 7.0 magnitude hit southern Japan’s Kyushu Island on Saturday. Later, despite a recovery to 108.46 ahead of Asian open, price retreated to 107.90 in Tokyo morning due to a decline of near 3% in Nikkei (currently down 2.7% or 454 points to 16,393).
Today, NAHB will release its housing market index for U.S. at 14:00GMT, however, focus of the market will be on the speeches fm New York Fed President William Dudley n Minneapolis Federal Reserve president Neel Kashkari at 12:30GMT n 16:30GMT respectively.
At present, offers are reported at 108.30-40 n more at 108.50-70 region with mixture of offers n stops located at 108.80-90. On the downside, initial bids are noted at 107.70-60 n then 107.50-40 with stops below 107.30.
The dollar-yen pair is seen consolidating strong gains witnessed over the past two trading session and now awaits fresh impetus for the next leg higher.
The extension of the rally on the Asian indices, particularly Japan, keeps the sentiment buoyed and thus, diminishes the safe-haven bids for the yen. The Japanese Nikkei rallies +2.93%, while the Australian stocks are up almost +1.20%.
Overnight, the dollar rose to one-week highs against the other major currencies on Wednesday, despite the release of disappointing U.S. economic reports, as the greenback continued to recover from sharp losses posted earlier in the week. The U.S. Census Bureau said that retail sales fell by 0.3% in March, disappointing expectations for an uptick of 0.1% and after a 0.1% fall the previous month.
Focus U.S Data.
The major managed to regain footing after poor US retail sales and PPI data induced dip and now wavers at higher levels as we progress towards the US CPI and jobless claims report due later in the NY session.
The safe-haven Japanese yen slid from recent peaks against the greenback on Wednesday as solid gains in oil prices helped underpin risk appetite.
The major spiked to fresh daily highs at 109 levels after the Nikkei climbed further to hit fresh highs, triggering a renewed risk-on wave in the markets, which further dampened the safe-haven appeal of the yen. At the time of writing, USD/JPY eases-off session highs and trades around 108.90, still up +0.90% on the day.
The fresh buying interest witnessed around the riskier assets such as the equities, was fuelled by upbeat Chinese trade data. The Japanese Nikkei rallies +2.84%, while China stocks are up almost +2.50%.
The traders continue to track the sentiment in the oil and stock markets ahead of crucial US retail sales and PPI data due later in the NY session.
The Japanese currency is seen reversing a part of the recent rises against its American counterpart, largely on profit-taking after five consecutive sessions of extensive gains. At the time of writing, USD/JPY trades at 108.74, recovering from a brief dip to 108.57 levels, recording a 0.50% gain on the day.
Meanwhile, Bank of Japan Governor Haruhiko Kuroda said on Thursday that he will “undertake additional monetary easing” if needed, either by increasing the central bank’s asset purchases or by lowering its deposit rate further below zero, or both.
Overnight, the dollar was little changed near five-and-a-half month lows against the other major currencies on Thursday, after upbeat U.S. jobless claims data as the minutes of the Federal Reserve’s March meeting continued to weigh.
Further, the short-covering rally in the major remains unperturbed by upbeat Japanese current account data, which showed that the current account surplus expanded from JPY520.8 billion in January to JPY2.43 trillion in February, coming in higher than the forecast of a JPY2.03 trillion surplus.
Economic Data In Focus.
Looking ahead, amid a lack of fresh economic releases later today, focus will remain on the Fed speaks and sentiment around oil and stock markets.
The yen extends its bullish run against the American dollar for the fifth straight session as the JPY bulls continue to cheer comments from a number of Japanese officials and fx experts, noting that fx market intervention in a bid to stem the yen’s appreciation looks unlikely at the moment.. At the time of writing, USD/JPY hit fresh eighteen-month lows at 108.77, down -0.88% on the day.
The latest spurt of selling seen in the USD/JPY pair can be justified by a sudden downward rally in the US dollar against its major peers, knocking-off US dollar index to fresh six-month lows at 94.19, losing -0.30% so far this session. The greenback came under renewed selling pressure as the European traders hit their desks and give up the USD, reacting to the more dovish FOMC minutes released last US session.
Focus Main Event’s.
The major will continue to track the broader market sentiment, while US jobless claims will be watched for fresh cues on the buck ahead of Friday’s Yellen’s speech in the Asian morning.