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  • USD/JPY struggles to maintain the bid, down -0.15% in Asia.  
  • Federal Reserve speakers have been a keen focus.

USD/JPY rose from just above 107.00 to 107.85 overnight but has run into supply and is down around -0.15% in the Tokyo open, reaching as low as 107.60. The Dollar was strong overnight but has come under some pressure in Asia, giving back some gains where the DXY had rallied some 0.70%.  

Ears to the ground for Fed speakers

Geopolitical headlines were circulating, but without any real traction one way or the other and instead, traders were tuning into Federal Reserve sentiment. Its been ears to the ground for Fed speakers this week.

Overnight, we heard from Chicago Fed President Evans, who normally leans to the dovish side. He said that after the 2 cuts the FOMC has delivered, he forecasts inflation to overshoot 2% somewhat, so, “I did not have another rate cut in there” (dot plot). Richmond Federal Reserve Bullard president, a voting member on the FOMC in 2019, had been interviewed on CNBC saying that he wants another 25bp cut before end of 2019,

Meanwhile, while the repo market has sent a bid in the Dollar, the US 2-year Treasury yields climbed from 1.60% to 1.68%, the 10’s climbed from 1.64% to 1.73%. “Markets are pricing the only 14bp of easing at the 31 October meeting and a terminal rate of 1.06% (vs 1.88% currently),” analysts at Westpac mentioned.  

In the Sydney morning today, and again early, NY trade Dallas Fed President Kaplan made comments as follows:

Fed’s Kaplan: Feels the US can skate thorough a fragile period of global growth

  • US can skate through a fragile period of global growth.”
  • “Odds of recession in the next 12 months are relatively low.”

Looking ahead, we will hear more from Fed’s Bullard who is speaking at a St Louis Fed forum; We have Daly opening a “Fed Listens” event in San Francisco and also Kashkari speaks at a “Town Hall” event.  

USD/JPY levels