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  • Trade wars keep the yen in the top spot ahead of Chinese trade data and the RBNZ.
  • BoJ minutes lack impetus, same-same play it again sam.  
  • USD/JPY is currently trading at 110.21, within its range of between 110.11 and 111.29.
  • Japan PMIs for April: services 51.8 (prior 52.0) & composite 50.8 (prior 50.4).

The BoJ minutes were playing the same tune:

  • Most members agreed must persistently maintain powerful monetary easing.
  • One member said must maintain easy policy with eye on side-effects such as impact on financial institutions, market functioning.
  • One member said should be prepared to respond if downside risks to economy, prices were materialising.
  • One member said must pre-emptively act upon shift in economic, price developments.
  • One member said monetary policy should not respond automatically to every short-term fluctuation in economic data.
  • One member said should maintain current easy policy as long as output gap was positive.
  • One member said there was some risk the scheduled sales tax hike would exert downward pressure on economy.
  • One member said fiscal, monetary policies must further coordinate, stimulate demand when early achievement of price goal could not be envisaged.

Data was not a market mover either:  Japan PMIs for April: services 51.8 (prior 52.0) & composite 50.8 (prior 50.4). Instead, the focus for today will be the Chinese trade data. Analysts at Westpac explained:  

  • China exports rebounded sharply in March, to 14.2%yr while imports were soft, producing a trade surplus around $32bn. The median forecast for April is +3%yr on exports and -2%yr on imports for a surplus around $35bn. No set time is listed for the release.

Meanwhile, the focus stays on Sino/US trade wars. Overnight, the Dow, S&P 500 and Nasdaq dropped at least 2% after Washington doubled  down on threatening China with tariffs and USD/JPY  printed a  fresh low  at 110.17  and now 110.11 in Tokyo.   China, while likely looking for some middle ground, are not about to bow down to the Trump administration.    

  • China will keep calm in face of trade talk challenges.

The People’s Daily said that China will keep calm against threats of higher tariffs from the United States and has “complete confidence” in its ability to face challenges in trade talks – said a commentary in China’s top newspaper, responding to U.S. President Donald Trump’s threat to raise tariffs on US$200 billion worth of Chinese goods this week and target hundreds of billions more; The People’s Daily said China had faced similar threats before.

  • ‘Do not even think about it’: Beijing refuses to give in to Trump’s latest threat on trade tariffs – SCMP

USD/JPY levels

USD/JPY Technical Analysis: Downside targets as trade wars take grip, 110 the figure under threat

Valeria Bednarik, the Chief Analyst at FXStreet, explained that the USD/JPY pair is short-term oversold, yet nothing indicates that the decline will stall, particularly after the pair fell below Monday’s low without filling the weekly opening gap. In the 4 hours chart, the 20 SMA heads lower almost vertically far above the current level and extending its decline below the larger ones, reflecting the strong bearish momentum, while technical indicators head south within oversold levels. March monthly low at 109.70 is now a possible bearish target, and critical support, as below it, the decline may extend down to the 108.60 price zone during the following sessions.