- USD/JPY is very quiet in Tokyo’s open, stationary around 113 the figure.
- We are now entering US Thanksgiving holidays which are traditionally a quiet time for markets, but given the amount of geopolitical angst, traders will remain on alert and at their stations.
USD/JPY bulls were able to capitalise on a slightly improve tone in risk and rose to 113.13 overnight as US stocks manage to scrape a positive close on Wall Street.
- The Dow settled unchanged at 24464.60, slightly above the 24463.28 low but well below the high at 24669.79, so it did not reflect the risk tone that supported the USD/JPY for the day.
- The S&P index ended higher by 8.04 points or 0.30% at 2649.93, again well below the high at 2670.73.
- The Nasdaq closed higher by 63.427 points or 0.92% at 6972.25.
US data was mixed, but a weight on the dollar in general that ranged between a narrow sideways range for the best part of the overnight sessions between the 96.50’s and 97.90.
US data underpinning renewed sentiment in the Fed and US growth
Meanwhile, US data was a mixed bag. Existing Home Sales MoM was a pleasant surprise to the upside at 1.4% vs 1.0% expected and far exceeding the previous -3.4%. The street is concentrating on the US housing market with respect to the Fed’s path of tightening, using it as a barometer considering it has been weighed upon this year by higher rates of interest. The 30-year mortgage rates are close to 5.2% now and these are the highest for eight years.
We also got a terrible durable goods number which signals a slowdown in capex slowdown (business investment) despite Trump’s effort to encourage companies to bring back overseas profits through tax cuts has done little to encourage corporate investment. October’s orders were down -4.4% vs -2.5% expected and lower than the -0.1% prior that was actually revised from 0.8%.
As for the US 10yr treasury yields, they climbed a little from 3.07% to 3.09% before retracing while 2yr yields climbed from 2.80% to 2.83%. the moves were strangely dull considering the improved risk sentiment and the reduced outlook for the Fed’s path of tightening, although, with the looming Thanksgiving Day holiday, it may not be too surprising. The Fed fund futures yields repriced the chance of another rate hike on 19 December at 75% (from 70%).
USD/JPY levels
- Support levels: 112.60 112.30 112.00.
- Resistance levels: 113.35 113.70 114.00.
Valeria Bednarik, Chief Analyst at FXStreet explained that the pair was holding on to gains but was below its daily high:
“The pair offers a mildly bullish stance short-term, as in the 4 hours chart, it recovered above a directionless 200 SMA, still below the 100 SMA, as technical indicators advance within positive ground. The mentioned 100 SMA offers an immediate psychological resistance at around 113.35, with gains beyond it favoring an approach to the 114.00 figure, should the positive mood persist. The pair will turn negative on a break below 112.00, where it still has the 100 DMA.”
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