Forecast on USD/JPY

The Friday report on employment in the US did not have a significant impact on the currency market, only confirming the presence of positive changes in the economy of the country. In February, 313,000 jobs were created, which was the biggest monthly increase in 3,5 years. Although the unemployment rate has risen, and wage growth has slowed, the main thing is that these figures are high enough for, the Federal Reserve to raise interest rates later this month. Activity in the service sector continues to grow at a healthy pace, and judging by the Beige Book, the economy to grow modestly or moderately from January to February, and the narrowing of the gap between supply and demand in the labor market to lead to higher wages and inflation.
This week, the focus will be on inflation and consumer spending for February. It is expected that the costs will roll back after the fall at the beginning of the year. As in the case of the employment report, if data on consumer prices or retail sales are not horrible, Fed Chairman Jerome Powell will raise interest rates this week for the first time after his promotion. USD/JPY rose at the end of last week and could reach 108 if US stocks continue to strengthen.

Dollar collapsed today

Today, the dollar index DXY (that is, the dollar's rate to the basket of six world reserve currencies) collapsed to the lows that were last seen at the end of December 2014. Since the beginning of this year, the index has dropped by 2.6%. The dollar also lost in value and in relation to each of the world reserve currencies separately, "losing weight" against the euro by 0.75%, to the British pound sterling by 1.4%, to the Japanese yen by 0.8%, to the Canadian dollar - by 0.5%.
The most obvious reason for the fall of the dollar was the statement by US Treasury Secretary Stephen Mnuchin that a weak dollar is supporting the economy. In principle, he did not say anything new, just confirmed the economic pattern that a weak national currency supports production in exporting industries. American exchange speculators reacted "patriotically", because a weak dollar supports the US economy, and speculators from other countries helped the growth of their national currencies.

The Japanese bank kept interest rates, the yen with a two-month bottom

The yen fell sharply against the dollar after the Japanese central bank kept the interest rate and the volume of its asset redemption program unchanged.
This happened contrary to the comments that came after the Fed meeting yesterday and pointing to another raise in interest rates by the end of this year.
The decision of the Japanese central bank did not surprise the market, with all experts, which gave their forecasts for Bloomberg, were expecting such a solution.
The Asian indices traded mixed, with the Japanese ones rising, backed by the yen's depreciation. Earlier this morning the dollar was traded for 112.42 yen, the highest level since nearly two months.

The Japanese bank is expected to reduce its inflation forecast

Japan's central bank is expected to lower its forecast for inflation, but to refrain from increasing its incentives this month. This would be a step back from the promise of Haruhiko Kuroda, the head of the Japanese central bank, to do what it takes to reach inflation targets.
A potential fall in inflation forecasts in Japan would be another blow to the central bank as well as for the yen. The latter is already experiencing the negative impact of these expectations, with USD/JPY rising to levels above 113.50 yen.
The meeting of the Japanese Central Bank will be held on 19-20 July, which is expected to keep the monetary institution unchanged. But what investors will follow is what the bank will say about the state of the Japanese economy as well as about inflation.
Otherwise, expectations are for the CCB to reduce its inflation forecast for this year, ending March 2018, and for the next year.

The dollar is experiencing problems in the formation of growth against the yen

The dollar was supported against the yen last week, ahead of a speech by Federal Reserve Chairman Janet Yellen. But after her speech the dollar again came under pressure.

Overall statements of the President of the Federal Reserve were favorable for the dollar, but it was not enough for the formation of a stable uptrend in the pair USD/JPY. The Japanese currency is highly dependent on the dynamics of yields on US Treasuries. Yellen's speech gave no clear idea how many times this year interest rates will be increased and with what pace. This information was not enough and 10 year bonds rose by above 2.5 percent. Anyway bullish trend in USD/JPY looks extremely hard.

In the area between 114 and 115 yen for dollar there are active sellers. We must not forget that in Japan the new fiscal year begins on April 1. Before that there is support for the Japanese currency.

Strengthening of the yen and gold indicates a risk

On the last trading day of the week the dollar shifted into recovery mode after the recent sales. Currency steadily strengthened against major currencies, but lost ground against the yen.
Despite the return of interest in the dollar, quotation continued to retreat, trading at weekly lows at 113.00 mark. The purchase of yen, which is actively growing in the dollar and the euro, suggests that markets do not forget about the political risks in the global arena, while on the stock markets at the same time signs of panic is not observed. For the concerns of investors signals an increased demand for gold, which is also a traditional safe haven. Metal is continuously going up already 4 day in a row, trading in the area of 1243.
In the US there are doubts that Trump will be opposed by some Republicans in an attempt to tax reform. Also, the players do not forget about the protectionist policies of the new president, fearing from new attacks on China, Japan, Germany and other countries. In Europe, the main risks are concentrated on the topic of elections, where there is a strength of anti-European sentiment, forming a threat to Europe's disintegration.
In the light of all these fears, the long-term prospects for safe assets look favorable. In bursts of optimism yen and gold will show temporary setbacks, which will then be replaced with new turns of purchases. Against this background, in mid-term USD/JPY could easily lose 111.00 level and reach 110.00.

The dollar is trading close to a 7-week low

The dollar is trading close to a 7-week low against a basket of other major currencies amid lingering concerns about the protectionist policies of Donald Trump.
The US Dollar Index, which shows the value of the dollar to a trade-weighted basket of six major currencies rose by 0.9% to 100.01 (after yesterday's low of 99.77 - the lowest value since December 8).
The decline of the dollar index reflects a concern about the uncertain Trump's economic policy, as well as fears that his protectionist stance can reduce corporate earnings and become a brake on economic growth.
On Wednesday, Trump confirmed plans to build a wall on the border with Mexico and has taken preparatory measures to combat illegal immigration.
The dollar rose against the yen: USD/JPY rose by 0.32% to 113.66, holding above a 7-week low of 112.51, recorded on Tuesday.
EUR/USD is down by 0.12% to 1.0737, close to a 7-week low of 1.0773 on Tuesday.
Pound updated 7-week high against the dollar. GBP/USD has risen by 0.21% to 1.2660.

The dollar fell because of concerns about Trump's protectionist measures

The dollar was held near seven-week lows in Asian trade on Tuesday under pressure from investors' concerns about the possible impact of protectionist position on trade of the US President Donald Trump.
The dollar index by 5.20 GMT increased by 0.1 percent to 100.070 after falling to 99.899 on Monday - the lowest level since Dec. 8.
The dollar against the yen gained 0.1 percent to 112.78, but earlier reached the level of 112.52 - the lowest level since 30 November, much below the maximum of 114.45, reached at night.
Trump on Monday formally brought the United States out of the Trans-Pacific Partnership Agreement (TTP), distancing America from its Asian allies. He also said that he intends to revise the North American Free Trade Agreement (NAFTA).
The negative impact on the dollar has also had a decrease in yields on US bonds. Yield on indicative 10-year Treasury bonds showed a biggest of more than two weeks in a one-day decline, as fears about the consequences of a tough stance of Trump on trade increased demand for safe bonds.
The euro fell by 0.1 percent to $ 1.0753, earlier reaching $1.0774 - the highest value since December 8th.

The dollar moved away from the lows, investors expect Yellen's performance

The dollar took a little breather on Wednesday after falling to a seven-week low against the yen, while investors awaited the speech by Fed's governor Janet Yellen devoted to monetary policy.
The US currency strengthened by 0.6 percent to 113.30 yen after passing the minimum of seven weeks at 112.57 yen. The Japanese currency strengthened seven consecutive sessions.
The dollar index, showing the dynamics of the US currency against six major currencies, amounted to 100.640 points by 5.45 GMT, adding 0.3 percent. On Tuesday, the dollar fell to 100.26 points, its lowest level since December 8.
The euro was down by 0.28 percent to $1.0683, breaking the day before the mark of $1.07195, which is the maximum value from December 8.
In his speech, Yellen on Wednesday may contain indications of the direction of US monetary policy.

The yen has fallen, Trump raised fears about a possible trade war

The dollar rose against the yen on Friday during the Asian trading session, after US President-elect Donald Trump on Twitter criticized the largest Japanese car company, prompting fears of a possible trade war between the United States and the leading Asian trading partner.
"Toyota Motor said will build a new plant in Baja, Mexico, to build Corolla cars for U.S. NO WAY! Build plant in U.S. or pay big border tax," Trump said in a post on Twitter. USD/JPY was trading at 116.19, gaining 0.72%.
Yesterday, the US dollar has fallen relative to other major currencies, after the minutes of the last meeting of the Federal Reserve pointed to the uncertainty about the possible consequences of the economic policies of the future Trump presidency.
The index reached its highest level in 14 years on Tuesday as strong performance in the US manufacturing strengthened expectations about the high rate of monetary tightening in 2017.
But the dollar came under pressure on Wednesday after the Fed's minutes, which were held on December 13-14, showed that officials noted "considerable uncertainty" about the policy of President-elect Donald Trump.
Trump takes office on Jan. 20, and so far has not voiced the details of his economic policy.

USD/JPY

The US dollar still will grow today in terms of published in China moderately pessimistic statistics on the trade balance for November. The reduction reached 44.61 billion yuan, against 49.06 in October. At the same time for January-November the total amount of China's foreign trade decreased by 6.9% compared to the previous year and amounted to $3.31 trillion. Despite the fact that the values for the previous month was even worse, and it would be necessary to wait for the optimism of investors, actual data will be more representative at the end of the year. That's why for the USD/JPY pair there is a prospect of growth by the end of the day.

Thanksgiving and Black Friday

Yesterday the United States celebrated Thanksgiving Day and started buying at discount. US financial markets were closed and trading activity has declined markedly, but with the opening of the last trading session of the week in Asia, the dollar came under selling pressure. And everything indicates that this correction can turn into a more active sales in the medium term with a subsequent entry in sideways channel at the current highs.
After the upgrade by the US dollar index highs in the 102nd figure sellers activity increased. Of course, we can talk about fixing profits on long positions, but the fundamental reasons for further growth is not enough. At the same time reports on the change in the balance of foreign trade will be released today. Traditionally, this indicator is in the negative zone, but an increase in the deficit is very negative for the US dollar, especially given its strengthening these days. The experts forecast increase in the deficit to 59.2 billion. The excess of the projected growth rate may enhance the activity of the sellers, but surprisingly good values ​​in the report yet can strengthen the US dollar.
Accordingly, the further strengthening of the EUR/USD, AUD/USD and a weakening USD/JPY is a part of the terms of the basic scenario. But currently there are no strong trading signals to open positions on these instruments.

Dollar rises in price against the yen, depreciates against the euro

During today's Asian trade, the dollar continues to appreciate against the yen depreciates against the euro.
By 6:30 GMT the dollar against the yen rose to 113.57 yen compared with 113.33 yen at the close of the previous session. During the trade session the value of the dollar rose to 113.9 yen - the highest since March 15.
The US currency has risen by almost 10% against the yen since November 4, and its rise over the 3 weeks is the highest since 1995, Bloomberg reported.
Euro at the same time was worth $1.0574 versus $1.0554 at the close of the previous trading.
Forecasts of the acceleration of inflation and the rate of US GDP growth in the implementation of policies D.Tramp voiced during the election campaign, has led to an increase in US Treasuries yields to the highest level this year. It supports dollar, as well as promotes the growth of expectations that the Fed will raise the base interest rate, experts say.
Minutes of the Fed's November meeting, released on November 23, showed that the leaders of the US central bank is actively discussing the rise in interest rates during the last meeting, and came to the conclusion that the increase may become expedient quite soon.
Traders estimated at 100% the chance of a rate increase by the Central Bank in the US December meeting.

Dollar at 8-month peak on expectations the Fed raising rates

The dollar rose on Monday to a new eight-month high against major currencies, supported by expectations of raising interest rates before the end of the year.
The dollar index, which tracks the US currency against a basket of six major rivals, rose by 0.1 percent to 98.718, after rising up to the level of 98.846, its highest level since February, 3rd.
Last Friday, the head of the Federal Reserve Bank of San Francisco John Williams repeated his appeal for rapid increase in Fed rates, telling reporters that "this year eligible" for the tightening of monetary policy.
His comments were preceded by "hawkish" statements and other central bank officials, including the president of the Federal Bank of New York William Dudley and Fed Vice Chairman Stanley Fischer.
Quotations of futures on the federal funds rate show that the market assesses the likelihood of Fed rate increase in December to 70 percent.
The dollar also received a support by a recent poll, according to which US presidential candidate from the Republican Donald Trump loses against representing Democrats Hillary Clinton on the eve of the elections on 8 November.
The euro weakened by 0.1 percent to $ 1.0874, approaching Friday's low of $ 1.0857, the lowest level since March 10.
Against the Japanese yen the dollar gained 0.1 percent, rising to 103.86 yen.
Published on Monday data showed that Japan's positive foreign trade balance in September is at the level of 498.3 billion yen ($4.8 billion) against the average forecast of 341.8 billion yen.
Offshore yuan, trades in which are held outside of mainland China, updated six-year low against the dollar after weakening of the yuan in the market of mainland China on the background of the growth of the dollar index.

Scotiabank: The yen continues to grow

On Tuesday, the yen rose against all major currencies, despite the long-awaited publication of the plan for fiscal stimulus in the country. This behavior of the Japanese currency comes in response to a statement by the Japanese government yesterday and the decision of the Bank of Japan last Friday, indicating a high probability for further growth of the yen, reported analysts.

According to their short-term technical indicators USD/JPY draws bearish picture. The couple aims to test the zone around 100.45 yen.

Why are everybody is waiting for the meeting of the Bank of Japan?

USD/JPY is now a fairly complex market. Tomorrow's meeting of the Bank of Japan's is getting nerves of traders heated up much stronger than yesterday's meeting of the Federal Reserve. Market participants are in doubt - bet on increasing of monetary stimulus, or mentally prepared for the fact that on Friday the Bank of Japan would not live up to expectations?
The fact that on Wednesday the Japanese prime minister Shinzo Abe announced a solid amount of fiscal stimulus measures package of 28 trillion yen increases the pressure on the Bank of Japan in terms of action. Earlier, the head of the Central Bank Kuroda emphasized that fiscal and monetary easing are effective when used together. Apparently, the Japanese government wants from the formally independent central bank further policy easing. According to one point of view, for the Bank of Japan it is strategically important to act now, because with conscientious actions with the government the effect of the measures will be higher. According to Bloomberg, 80% expect the Bank of Japan will increase incentive program this week.
From another point of view, the measures taken by the Japanese government as well as the fact that the USD/JPY is trading at 105.00, and not at a critical level at 100.00, on the contrary, mean that the Bank of Japan decides to reserve monetary stimulus for "rainy days". Huge amounts of money, which the Japanese regulator has poured into the financial system of the country, could not help inflation. The more money "prints" the Japanese Central Bank, the harder it becomes to manage the situation. The lack of action by the regulator will cause the resumption of downtrend of USD/JPY, and bears rush to new lows. The Bank of Japan, of course, is aware of the pressure under which it is located and the potential consequences of inaction - that's why the majority of analysts believe that the amount of monetary stimulus will still be increased tomorrow.

USD reduces losses in inactive trading

The dollar stopped falling against other major currencies in quiet trading on Tuesday, as investors continue to focus on the upcoming meetings of the central bank on a background of high expectations of additional stimulus.
GBP/USD rose by 1.47% to 1.3182, rebounding from a 31-year low of 1.2794, reached last Wednesday.
Also on Tuesday, the International Monetary Fund said that Brexit likely to have a "negligible" impact on US economic growth.
USD/JPY rose by 1.66% to 104.49, the highest value since June 24, while USD/CHF rose 0.20% to 0.9848.
The yen weakened after the ruling coalition of Prime Minister Shinzo Abe won a landslide victory in elections on Sunday.
Coalition victory strengthened hopes for fresh stimulus measures.
EUR/USD rose by 0.26% to 1,1870.
Australian and New Zealand dollars rose sharply, AUD/USD rose by 1.31% to 0.7633 and NZD/USD rose 0.97% to 0.7289.
Earlier, the National Bank of Australia said that the index of confidence in the business community rose to 6 in June from 3 the previous month.
USD/CAD fell 0.63% to 1.3036, reaching the highest level since June 28.
Commodity currencies also rose, as on Tuesday, oil prices rose after the Organization of Petroleum Exporting Countries said that in 2017 global oil demand will increase, and excess reserves decrease.
USD index showing the US dollar against a basket of major currencies, was down 0.20% to 96.40, rebounding from the low of the day 96.08.

Morgan Stanley: USD/JPY can break through 105.00 and drop to 98.00

The fundamental basis of trade in the forex market currently remains negative for risky assets. This allows to count on further strengthening of the yen, write analysts at Morgan Stanley. Japan is trying to increase its fiscal stimulus.
The yen strengthened on behalf of cash flows related to hedging or insurance against the risk of unfavorable changes in the exchange rate. Here the difference between real interest rates in the US and Japan, in fact, plays an important role. As well as the set of tools in the arsenal of the Bank of Japan to weaken the yen seems scarce, there is a significant risk that the Japanese currency may strengthen significantly from current levels, they added.
The position of the bank suggests a bullish trend for the yen amid expectations of further reducing appetite for risky assets. The bank believed that the level of 111.50 seems durable and is currently unbreakable resistance.
Currently, the bank analysts expect that the support level at 105.00 on USD/JPY will be breached and the price will head towards the global target of 98.00.
According to them the yen could succeed strengthening before the Bank of Japan begins to review the possibility of progressive monetary and credit policy, which will go beyond the current strategy of quantitative easing.

Reducing the USD/JPY to 105 yen may cause the Bank of Japan to conduct intervention

Finance Minister of Japan Taro Aso said that the movement of the USD/JPY with five figures for two sessions are considered "one-sided" and that Japan does not intend to devalue the national currency "strong" or "long."
In his view it would be better if the pair stabilizes around 109.00 yen. This probably means that the reduction in the level of 105.00 may provoke intervention and these considerations probably at some point will chill the passions of the bulls in the Japanese currency.
On Tuesday morning the yen tried to rise against the dollar as investors avoided risk in lower expectations for Japanese intervention. The US currency rose to its three weeks peak at 110.59 amid prospects, that the Federal Reserve to raise interest rates in June.

USA noted that the dynamics of the yen is considered row, while Finance Minister Taro Aso continues to insist that the movement of the yen in recent months is "one-sided and speculative."
Aso also said that Japan has no intention to weaken further exchange rate to improve competitiveness.

Societe Generale predicts serious reversal in the currency market for USD/JPY

According to strategists from the bank in USD/JPY there is a hint of an impending correction of the pair. This is confirmed by the monthly and daily indications. They make bank analysts to think that after a year of decline couple prepares for serious turn.

Despite the fact that the long term downtrend remains in effect, in the short term they see upside risks to reach the USD/JPY to 108.70 and then to 110.40-111.00 yen.

Support is currently located at 106-105.20 yen, which may mean that there is potential to reduce to 101-100 yen (lows from 1999/2005, and the peaks of 2009).