USD/JPY – Japanese yen edges higher, inflation report next

The Japanese yen has posted gains in the Monday session. In the North American trade, USD/JPY is trading at 109.69, down 0.27% on the day. On the release front, the BoJ released its summary of opinions. Later in the day, Japan releases the Services Producer Price Index, which is expected to edge up to 1.0%. In the US, New Home Sales jumped to 689 thousand, well above the estimate of 665 thousand. On Tuesday, the Bank of Japan releases Core CPI and the U.S will publish CB Consumer Confidence. 

On Monday, the BoJ published the summary of opinions of last week’s June policy meeting. The summary, which precedes the minutes, indicated that policymakers urged the bank to ‘patiently continue’ its massive easing program. At the same time, some board members expressed concern that the program had undesirable side effects, such as ultra-low rates hurting the profitability of banks. At the June meeting, the bank maintained monetary policy but lowered its inflation forecast. With inflation mired below the BoJ’s target of just under 2 percent, the BoJ is widely expected to continue with its easing scheme well into 2019.

With little in the way of fundamental releases early in the week, the markets are keeping a wary eye on the escalating trade dispute between the U.S. and its major trading partners. The heads of central banks have expressed alarm, and last week, Jerome Powell and Mario Draghi sounded gloomy about the repercussions that a trade war could have on economic growth and monetary policy. On Sunday, the Bank of International Settlements (BIS), which acts as an umbrella group for some 60 central banks also weighed in. The head of the BIS, Augustin Carstens, warned that recent protectionist moves could hamper global growth and financial stability, and could have negative side effects on the currency markets. At the same time, the BIS expressed support for the Federal Reserve raising interest rates gradually and for the ECB heading towards normalization as it winds up its massive asset program.

  China’s liquidity boost tempered by trade war jousting

  Trade continues to weigh at the start of the week

USD/JPY Fundamentals

Sunday (June 24)

• 19:50 BoJ Summary of Opinions

Monday (June 25)

• 10:00 US New Home Sales. Estimate 665K. Actual 689K
• 19:50 Japanese Services Producer Price Index. Estimate 1.0%

Tuesday (June 26)

• 1:00 BoJ Core CPI
• 10:00 US CB Consumer Confidence. Estimate 127.6

*All release times are DST

*Key events are in bold

USD/JPY for Monday, June 25, 2018

USD/JPY June 25 at 11:05 DST

Open: 109.98 High: 110.04 Low: 109.38 Close: 109.69

USD/JPY Technical

USD/JPY edged lower in the Asian session but has recovered in European trade. The pair has shown stronger movement in North American trade

• 109.21 is providing support
• 110.21 is the next resistance line

Further levels in both directions:

• Below: 109.21, 108.13 and 107.01
• Above: 110.21, 111.22, 112.30 and 113.75
• Current range: 109.21 to 110.21

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