- Risk sentiment stabilizes after the NY Fed disavowed President Williams’ comments.
- Expectations of US-China trade talks next week also pleased risk-takers.
- The USD/JPY pair earlier dropped to the month’s low on active risk aversion.
- US consumer confidence, trade/political headlines will provide near-term trade guidance.
In addition to the NY Fed’s comments reversing significance of the President Williams’ dovish statements, increasing odds for trade developments between the US and China also triggered USD/JPY recovery from monthly lows as it takes the bids to 107.55 during early Friday.
The safe-haven pair dropped to the month’s low after the US Fed policymakers heightened chances of a 50 bps Fed rate cut during the July 31 meeting. Adding to the risk aversion was the US-Iran and the US-China tussles that have been present off-late.
Though, market mood shifted during Asian morning on Friday after the Federal Reserve Bank of New York mentioned that comments made by the President John Williams at the academic institute were not indicative of the US Federal Reserve’s future policy actions.
Further strengthening the momentum was the Washington Post’s article that said the US tech firms are pushing the Trump administration to allow them to supply the part to China’s Huawei. It should be noted that the US-China trade talks are presently hovering around the same issue which the US is refraining from off-late.
Investors may now keep eyes over the US Michigan Consumer Sentiment Index (July), expected 98.5 versus 98.2, coupled with the news headlines concerning trade and politics for fresh impulse.
While the US markets are still left to react to the NY Fed’s U-turn, chances of the greenback to strength during the later day are high if the scheduled data don’t disappoint. Also, the US recently claimed to shot down an Iranian drone and developments surrounding the same will grab investors’ attention.
Technical Analysis
Multiple lows marked during mid-July highlights 107.80/85 as the key short-term resistance, a break of which can propel prices to 1-week old descending trend-line around 108.05/10. Alternatively, 107.20 and 106.78 become crucial for sellers to watch during the pair’s declines.
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