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Sean Callow, analyst at Westpac, suggests that their multi-month positive bias for the USD/JPY pair remains intact.

Key Quotes

“The US economy has lost momentum but the Fed already expected a softer 2019 and with the distortions of the government shutdown etc, it is not at all clear that the growth outlook is far from the Fed’s base case.”

“At the very least, US rates markets are not interested in pricing a 2019 Fed rate cut, which is a reasonable stance given for example the US non-manufacturing ISM at 59.7 in Feb.”

“USD/JPY has probed the 112.00 area a couple of times lately, printing YTD highs. As the chart shows, spec positioning is now nicely balanced for a push towards 113 multi-week, and consolidation near term would not alter the bullish longer term outlook.”