USD/JPY – Japanese yen slips as BoJ says no rate hike in store

The Japanese yen has posted considerable losses in the Tuesday session. In North American trade, the pair is trading at 111.92, a gain of 0.76% on the day. On the release front, Japanese Preliminary Industrial Production declined 2.1%, a much sharper drop than the estimate of -0.3%. Japanese Housing Starts plunged 7.1%, compared to the estimate of -2.1%. The Bank of Japan released a rate statement and held rates at -0.10%. In the U.S., Personal Spending improved to 0.4%, matching the estimate. CB Consumer Confidence climbed to 127.4, beating the estimate of 126.5 points. On Wednesday, the U.S publishes key manufacturing and employment data, and the Federal Reserve will release a rate statement.

 The Bank of Japan made no change to interest rates but did tweak its monetary policy, as it provided forward guidance on future policy. The Bank said that that rates would remain “very low” for an “extended period of time”. BoJ Governor Haruhiko Kuroda went out his way to dispel any speculation that the Bank is considering exiting its massive stimulus program or raise rates. His message appears to have been heard loud and clear, as the yen has posted strong losses on Tuesday, as investors resign themselves to more of the same from the BoJ.

The U.S economy continues to sparkle, and Friday’s Advance GDP for the second quarter reflected this, with an excellent gain of 4.1%. This is much higher than the 2.2% gain recorded in the first quarter. This reading was within market expectations, so the dollar wasn’t able to gain ground. Strong economic numbers have kept the U.S currency at high levels, despite recent remarks by President Trump that the dollar is too high and is hampering exports. These comments have weighed on the dollar, but usually for a brief time only, as the performance of the economy has talked louder than Trump’s tweets. On Friday, Trump took credit for the strong GDP report and claimed that “these numbers are very, very sustainable”. However, analysts are being more cautious in their forecasts, with growth in the third quarter expected to drop to around 2.5 percent.

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USD/CAD Fundamentals

Monday (July 30)

• 19:30 Japanese Unemployment Rate. Estimate 2.3%. Actual 2.4%
• 19:50 Japanese Preliminary Industrial Production. Estimate -0.3%. Actual -2.1%

Tuesday (July 31)

• 00:03 – BoJ Outlook Report
• 00:03 BoJ Policy Rate. Estimate -0.10%. Actual -0.10%
• 00:03 BoJ Monetary Policy Statement
• 1:00 Japanese Housing Starts. Estimate -2.5%. Actual -7.1%
• 1:04 Japanese Consumer Confidence. Estimate 43.9. Actual 43.5
• 2:29 BoJ Press Conference
• 8:30 US Core PCE Price Index. Estimate 0.1%. Actual 0.1%
• 8:30 US Personal Spending. Estimate 0.4%. Actual 0.4%
• 8:30 US Personal Income. Estimate 0.4%. Actual 0.4%
• 8:30 US Employment Cost Index. Estimate 0.7%. Actual 0.6%
• 9:00 US S&P/CS Composite-20 HPI. Estimate 6.4%. Actual 6.5%
• 9:45 Chicago PMI. Estimate 61.9. Actual 65.5
• 10:00 US CB Consumer Confidence. Estimate 126.5. Actual 127.4
• 20:30 Japanese Final Manufacturing PMI. Estimate 51.6

Wednesday (August 1)

• 8:15 US ADP Nonfarm Employment Change. Estimate 186K
• 10:00 US ISM Manufacturing PMI. Estimate 59.4
• 14:00 US FOMC Statement
• 14:00 US Federal Funds Rate. Estimate <2.00%

*All release times are DST

*Key events are in bold

USD/JPY for Tuesday, July 31, 2018

USD/JPY July 30 at 11:15 DST

Open: 111.07 High: 111.96 Low: 110.75 Close: 111.92

USD/JPY Technical

USD/JPY ticked higher in the Asian session. The pair posted gains in the European session and continues to move higher in North American trade

• 111.21 is providing support
• 111.22 is a weak resistance line

Further levels in both directions:

• Below: 110.21, 109.21 and 108.11
• Above: 111.22, 112.30, 113.75 and 114.73
• Current range: 110.21 to 111.22

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