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