Home USD/JPY aiming at 100 once again

Once again the USD/JPY is aiming towards the 100.00 level, having tested resistance at the 99.44 level in overnight trading.   The JPY is lower against most currencies.   Japan was closed today for a banking holiday (Children’s Day).  

A break of the 99.45 level could see a quick move towards the 99.70 area and that would place the 100.00 area firmly insight.

Elsewhere in Asia overnight, the Australian Dollar was slightly lower after a report showed retail sales unexpectedly fell 0.4% m-o-m in March.   Retail sales were expected to rise 0.2%.   Most traders remain focused on

Tuesday’s RBA meeting where the central bank is expected to leave rates unchanged at 3.00%.   There has been conversation about a possible rate cut, but traders do not expect that to happen at this meeting, and they will look at the accompanying statement for any hints of a rate move in subsequent meetings.

As we move towards the European markets, the EUR is trading in a quiet range as the Eurozone PMI numbers are released.   Italian and French PMI were slightly higher, while German PMI was slightly lower.   Eurozone PMI was slightly higher at 46.9 in April up from 46.5 in March, but still well below the 50 level indicating the European economy is still receding.   On a positive note, EU Investor Confidence increased to -15.6 in May from -17.3 in April.The EUR is trading near the 1.3100 level and it loos as if the market will test the lower levels as we begin this week.

  Support for the EUR is at 1.3090, followed by 1.3070.   A break of 1.3140 on the topside would negate the downward move.   Adding to the possible pressure on the EUR, ECB President Mario Draghi is scheduled to speak today.   He certainly will be asked about last week’s comments regarding the possibility of negative interest rates.   Draghi is not the only central bank leader speaking today.  

FED Chairman Ben Bernanke will also speak today and as usual traders will listen for any hints that the QE program could began to lessen in the near future.The British Pound should come into focus later this week as the Bank of England meets later this week.  

No changes are expected in either interest rates or their asset purchase program.Also on the schedule for later this week is the G7 meeting in the UK at the end of the week.   Finance ministers and central bankers from the seven industrialized nations are expected to discuss the ongoing debt crisis in Europe as well as the challenges facing the global economy.

Matthew Lifson

Matthew Lifson

Matthew Lifson is a Foreign Exchange Trader and a Market Analyst. with Cambridge Mercantile Group.