- USD/JPY sticks to a tight consolidation range in holiday thin markets.
- A lack of data and geopolitical developments is making for a quiet spell for the pair.
- US House of Representatives is due to vote on articles of impeachment of President Trump.
USD/JPY rose slightly, to 109.55/60 while it now holds around 109.55 in a tight Asian range ahead of the Tokyo open.
The day was mundane overnight, with holiday thin markets and traders taking it easy while geopolitical headlines and developments pause and likely takes a back seat to the festive season.
We saw similar subdued action in the money-markets, with the US 2-year Treasury yield climbing from 1.62% to 1.63% while the 10-year yields rose from 1.87% to 1.92%. “Markets are pricing a near-zero chance of easing at the next Fed meeting on 29 January but a terminal rate of 1.38% (vs Fed’s mid-rate at 1.63% currently),” analysts at Westpac explained.
Trump impeachment: US House ready for historic vote
For the day ahead, the US data calendar is second tier with just the Dec Philly-Fed business survey, weekly Jobless Claims and November’s Existing Home Sales. In the immediate future, the US House of Representatives is due to vote on articles of impeachment of President Trump. “There will be separate votes on (1) Abuse of power and (2) Obstruction of Congress. The votes are expected roughly 4-6pm local time i.e. 8-10am Sydney,” analysts at Westpac noted.
However, impeachment is the two-stage procedure which can lead to the removal of a sitting president.
“In the first stage on Wednesday a majority in the House of Representatives, led by the Democrats, would need to support the move. If that passes a trial would be held in the US Senate – dominated by Republicans, the President’s party next month. Two-thirds would have to vote in favour. That’s unlikely to happen. But if it did, Donald Trump would be forced from the White House. The President has called it all a ‘witch hunt’,” the BBC wrote.
USD/JPY levels
Analysts at Commerzbank noted that USD/JPY remains below the 109.71/79 resistance zone, made up of the current December highs and also the November 2018 to 2019 downtrend line as well as the 200-week moving average.
“Only if the 109.71/79 area were to successfully be bettered, would the 2015-2019 downtrend line at 110.40 be back in the picture. We expect to cap, if reached, however. Support can still be seen between the 200- and 55-day moving averages as well as the current December low at 108.77/43. Only unexpected failure at 107.89 would probably trigger losses to the 106.48 October low. Failure at 106.48 would target the 106.00 mark.”
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