Dollar/yen reversed directions last week, as the yen improved and dropped below the key 110 line.The upcoming week features the Bank of Japan’s preferred inflation gauge, BoJ Core CPI, as well as Japanese retail sales.
USD/JPY fundamental movers
There were no surprises from the Bank of Japan, which maintained its monetary policy. There was some positive news, as bank policymakers raised the bank’s growth projections for fiscal year 2020 from 0.7% to 0.9%. The catalyst for the upward revision was the government’s $120 billion economic package which was announced in December.
In the U.S., the labor market continued to produce solid numbers. Unemployment claims came in at 211 thousand, lower than the estimate of 214 thousand. The indicator has now beaten the forecast for a third straight week. The manufacturing PMI slowed in January, coming in at 51.7 pts. This marked a 3-month low and missed the forecast of 52.4 pts. There was better news in the services sector, as services PMI improved from 52.2 to 53.2, which was above the estimate of 52.9 pts. This marked a 10-month high.
The Japanese yen received a boost last week, as risk apprehension soared on reports that the China coronavirus has spread outside the country and even reached the U.S. With investors fearful of a mass epidemic, the safe-haven yen could continue to rally.
Kenny Fisher - Senior Writer
A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer.
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