USD/JPY – Japanese yen edges lower, BoJ inflation ahead

The Japanese yen has edged lower in the Monday session. In North American trade, USD/JPY is trading at 112.68 up 0.12% on the day. On the release front, Japanese All Industries Activity improved 0.5%, up from 0.0% month earlier. The reading was a shade better than the estimate of 0.4%. On Tuesday, Japan releases BoJ Core CPI, the preferred indicator of the Bank of Japan. 

Japanese policymakers are keeping a close eye on the strained relations between China and the U.S., as the trade war between the two economic giants shows no signs of abating. The U.S Treasury Department released its semi-annual report on foreign exchange rates, and there was some relief in the markets as the report did not name China as a currency manipulator. Still, the report said that the U.S was “deeply disappointed’ with that China refuses to disclose the extent of its foreign currency intervention. The Chinese yuan has slipped some 9 percent since April, and U.S officials are concerned that China has deliberately weakened the currency in order to counter U.S tariffs on Chinese goods, and will continue to monitor China’s currency practices.

The Bank of Japan’s radical monetary easing policy has cut into the profits of many financial institutions, but the BoJ has no plans to alter course. The bank released its semiannual financial system report, which noted that the financial sector shows no signs of overheating and that banks continue their “active lending attitudes”. The BoJ is unlikely to make any changes to policy before 2020, aside from some minor tweaks. Bank policymakers will meet on Oct. 30-31 for the next policy meeting.

Desperately seeking stability

China equities lead the pack as US indices lag

European update – The calm before the storm

USD/JPY Fundamentals

Monday (October 22)

• 00:30 Japanese All Industries Activity. Estimate 0.5%. Actual 0.4%

Tuesday (October 23)

• 1:00 Japanese BoJ Core CPI
• 10:00 US Richmond Manufacturing Index. Estimate 25
• 13:30 US FOMC Member Bostic Speaks

*All release times are DST

*Key events are in bold

USD/JPY for Monday, October 22, 2018

USD/JPY October 22 at 10:45 DST

Open: 112.68 High: 112.75 Low: 112.66 Close: 112.78

USD/JPY Technical

USD/JPY ticked higher in the Asian session and posted slight gains in European trade. The pair retracted at the start of North American trade but has changed directions and moved higher

• 112.30 is providing support
• 113.75 is the next resistance line

Further levels in both directions:

• Below: 112.30, 111.20, 110.28 and 109.32
• Above: 113.75, 114.73 and 115.51
• Current range: 112.30 to 113.75

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