The Japanese central bank laid the foundation for the yen to fall

The Japanese yen is expected to depreciate against other major currencies, including the US dollar, after the country's central bank did not take action to curb its record monetary stimulus.
After the Japanese central bank meeting, Haruhiko Kuroda announced that the key interest rates in the country would be slightly increased, but did not mention anything about changing the monetary policy of the bank and record monetary stimulus.
Kuroda clearly said this morning that in an environment of continuing low inflation, the central bank has no intention of raising interest rates and will continue to maintain its incentives until targeted inflation is reached.
This largely disappointed investors and traders who were betting on a change in central bank policy. The yen, which had registered a significant growth against the dollar and the rest of the currencies, returned almost everything earned.
Earlier this morning, one dollar swapped at levels of about 112.00 yen.
Kuroda clearly said this morning that in an environment of continuing low inflation, the central bank has no intention of raising interest rates and will continue to maintain its incentives until targeted inflation is reached.

Nomura: Shorten the dollar in the summer

Temperatures are rising, and hence the tensions in foreign exchange markets. Japan's largest financial institution, Nomura Holdings Inc., has one offer for currency traders. And it is - to shorten the dollar in the summer.
The financial institution is of the opinion that a short dollar may be a good idea for the next three to four months. The recommendations are to shorten the dollar against the yen and the euro.
Since January, green money has been the strongest base currency, backed by Fed's rising interest rates.
Yesterday, the Fed kept the level of interest unchanged, warning that inflation was almost at the target level. Nonetheless, Nomura is of the opinion that the interest rate increase, which was not implemented yesterday, may begin to slow down.
And in an environment of expectation of ending the incentives from other leading banks around the world, the dollar may begin to decline compared to other major currencies, Nomura said.
Together with rising US inflation, Nomura believes that further interest rates, albeit at a slow pace, will have a very negative impact on the bond market.

The dollar stops with its growth

The dollar and interest on US bonds are on track to end their four-week rise after several Fed officials have expressed fears of inflation. This reduced the expectations for another US interest rate hike this year.
The euro has risen by about a cent above its seven-week minimum, reached in last Friday.
The pound has appreciated against other major currencies, following strong export growth in the country over the past month.
The appreciation of the British currency was also prompted by the speculation that Europe would offer the UK a two-year transition to leaving if Britain respects its financial obligations to the union.
The yen rose after the news of a slight earthquake as a result of North Korea's nuclear attempts. According to South Korea, however, the earthquake was the result of natural forces.

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 prospects for the yen till the end of the year

The environment can be defined as ideal for the Japanese yen. On the one hand, geopolitical uncertainty and the potential growing demand for yen are as a result of it and, on the other hand is the Japanese Central Bank's "tied hands", in background of Trump's efforts to devalue the dollar.
It has been rare in history that the US president has openly spoke that his country's currency is expensive, as we have already seen from Donald Trump. In this aspect, Trump would not hesitate to condemn the intervention of the Japanese bank and this is probably a well-known fact for everyone.
We can not ignore the forecasts of the former Japanese finance minister, in the face of Eisuke Sakakibara, also known as Mr. Yen, who has been warning since mid-last year that the dollar is heading for 100 yen. Sakakibara confirmed his position again this year.

Inflation in the UK passed the limit of 2%

For the first time in three years, consumer prices in the UK recorded a growth of 2.3% yoy, as expectations were for 2.1%. Bank of England repeatedly hinted its willingness to tolerate exceeding goal inflation is limited.

On Tuesday the pound recorded strong growth, while GBP/USD rose by 114 pips, closing at 1.2471. The British pound was also supported with the exact date of activation of Art. 50 of the Treaty of Lisbon.

The euro continued to gain against the greenback and the EUR/USD rose to 1.0806 dollars per euro.

The dollar was subject to sales also against the Japanese yen, as USD/JPY fell over 70 pips, closing at 111,777 yen per dollar. According to Japanese analysts pressure on the greenback was due to falling yields on US bonds.
   
On Tuesday, gold rose by 0.85% at the beginning of the Asian session, the precious metal was subject to sales and reached 1226.91, but subsequently rose and closed at 1244.38 dollars per ounce. The gold price is sensitive to interest rate increases, but rate hikes are not expected in the near future, which explains the bullish sentiment of investors and analysts. Since the increase in interest rates last Wednesday, gold has increased by over 45 dollars per ounce.

The B20 Minfin Summit is the next risk factor for the dollar

Sales of US currency slowed on Friday. The markets have practically played the insufficiently tough rhetoric of the US Federal Reserve, having switched attention to the G20 summit at the level of finance ministers.
EUR/USD reached 5-week highs in the region of 1.0780, receiving a fresh impetus to growth on ECB's "hawkish" comments by E.Novotny, who hinted on the possibility of raising the deposit rate before the expiration of the asset buy-back program. Having reached this resistance, the euro attracted a profit-taking and went into negative territory.
Now the main currency pair will wait for signals from the G20 summit. And here, we must admit, there are downward risks for the dollar. Participants in the foreign exchange market fear that Washington will again oppose a strong national currency, in which the Trump administration is not interested right now. In addition, in the draft copy of the G20 there are hints of adherence to the goals of preventing competitive devaluation of currencies.
If these risks are confirmed, on Monday the dollar can expect a new wave of sales against most competitors. In this case, EUR/USD could break above the key area of ​​1.08, spurring growth. And USD/JPY, which is struggling to stay close to 113.00, will lose its psychological support first and go to 112.00.

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.

Dollar declines in anticipation of the promised by Trump incentives

Dollar drops slightly on Tuesday as investors took a wait on the eve of the US president's speech in Congress.
By 11.48 GMT the dollar index slowed down by 0.01 percent to 101.120 against a basket of major currencies after a modest growth in the previous day.
The US currency strengthened after Trump called for a "historic" increase in military spending, which improved appetite of dollar "bulls" before the speech of the American president in Congress.
Dollar Index reached a peak of 14 years shortly after Trump won in the November election against the backdrop of expectations that he will present an ambitious program of fiscal stimulus.
However, the US currency has recently gave up positions, as the administration of Trump has not explained the details of the plans, particularly those regarding tax reform, so the focus has shifted to the President's appearance before the Congress.
Dollar slowed down by 0.15 percent against the yen to 112.50 yen.
The euro gained 0.06 percent against the dollar to $1.0590, moving away from the week peak of $1.0631 reached the previous day.

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.

The dollar fell after the release of weak ADP report

Dollar drops against the major currencies after data from ADP showed that employment in the US private sector grew in December, much less than expected.
ADP reported that the level of employment in the private sector rose to a seasonally adjusted 153 thousand last month, below the projected increase of 170 thousand.
In November 215 thousand jobs were created.
The ADP report is not considered as an accurate indicator about government NFP data, which will be published today, January 6, but can serve as a reference for market participants.
The EUR/USD after the publication of this news has increased by 0.5% to 1.0540 (by 13:45 GMT).
USD/JPY has fallen by 1% to 116.06.
USD Index, which tracks the greenback against a basket of six major currencies, fell by 0.4% to 102.06.
Previously, pressure on the US currency made published protocols of the December meeting of the Federal Open Market Committee (FOMC) of Federal Reserve, which emphasized on the uncertainty as to the likely impact of the policy of the new administration of Donald Trump on the US economy and the Fed's monetary policy.

The future of the dollar after Fed (Part 2)

The reasons the Fed wants to increase the interest rate are few as two members even voted for the immediate lifting. In addition there are also improvements in the US economy as consumer spending, which are on the rise, job growth, low unemployment, higher consumer prices and housing market. These improvements led to a rapid increase in inflation and to avoid this Fed should immediately raise interest rates.
As for how interest rates rise will affect the US dollar, it is expected that there will not be a significant change, unless the Fed does not surprise markets with lifting with half a percentage or with a refusal to do that.
There are different possible outcomes of the meeting of the FOMC, which will determine the movement of the US dollar. Depending on the expectations and comments by Janet Yellen, the future of the greenback could largely be understood. If Yellen declares long-term pause or obscure term for subsequent lifting of interest rates, it can be expected more aggresive fall of the dollar. On the other hand, if Yellen expressed optimism about the economy and the need to tighten monetary policy, a new growth of the  dollar is not excluded.

The future of the dollar after Fed (Part 1)

The last time the Fed tightened monetary policy was in December 2015, but that will change after a few days, as the US central bank is preparing to raise interest rates for the first time this year.
Much has changed in the last year, but one thing remained the same, and it is that messages about monetary policy are major driving forces for the currencies, especially when the central bank is preparing to make a significant change of policy.
Everyone expects the Fed to raise rates, but what will be the reaction of the US dollar?
In general lifting of interest rates is positive for the currency, but in this case the US dollar has reached record levels. When the Fed last raised interest rates, there was a short continuation of growth of the dollar, followed then by a sharp turnaround, as USD/JPY from 123.57 reached 116 within a month and to 111 in just two months. Back then the chance of lifting interest was estimated at 75%, while now it is 100%.

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.