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At the Bank of Japan policy meeting, the Bank of Japan pledged to maintain its ultra-accommodative monetary policy. Although the economy is gripped by a recession, the central bank sounded somewhat optimistic about the economic recovery.
In the US, the highlight was the Federal Reserve policy meeting. As expected, the Fed kept interest rates close to zero. Of more interest to investors was the Fed message that it will not raise rates before 2023, under its new inflation target, which allows inflation to overshoot 2% without triggering a rate hike.
US retail sales slowed significantly in August. The headline reading dropped to 0.6%, down from 1.2%. Core retails sales came in at 0.7%, down sharply from 1.9%. This points to weakness in consumer spending, which is a key driver of economic growth.
Updates:
With USD/JPY dropping sharply, we start at lower levels:
107.29 (mentioned last week) is protecting the 107 level.
106.44 is next.
105.45 has switched to a resistance line after sharp losses by USD/JPY last week.
104.50 was tested in support late last week. It is a weak line.
103.52 has held in support since March.
102.13 is the final support line for now.
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USD/JPY Sentiment
I remain bullish on USD/JPY
With the US economy showing signs of recovery, sentiment towards the US dollar has increased. This could translate into gains for USD/JPY this week.
Further reading:
Safe Trading!
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