What’s next? – USDJPY 12.06.17

USDJPY

The dollar/yen was trading lower on Monday as of 13:20 GMT, hovering close to the 110.00 mark, down by 0.32 percent despite weaker economic data from Japan.

The Japanese government said core machinery orders for April dropped 3.1 percent month-on-month, falling short from an expected gain of 0.5 percent and up 2.7 percent on yearly basis, although also below an initially predicted 7.3 percent.

In a separate report, the producer price index came in flat for May m/m and marked a 2.1 percent growth year-over-year, again short from a forecasted 2.2 percent gain.

These data have not impacted strongly on the yen as the safe-haven demand is still on due to the upcoming meeting of the Federal Reserve this week.

The US regulator will kick off its two-day meeting on Tuesday and it’s widely expected to raise interest rates by 25 basis points to a range between 1.00 and 1.25 percent, which would be the second hike so far this year. Expectations for a rate move are standing at more than 95 percent.

The pair has also been under pressure in the last few hours on the back of a slight recovery seen on the US dollar following former FBI director James Comey’s testimony before Senate.

Concerns that the Trump-Comey case will derail the president’s economic reforms eased and markets were able to regenerate optimism on Washington’s agenda.

The Federal Reserve is not the only regulator on the calendar this week. The Bank of Japan and the Bank of England are also set to meet in the second part of this week. However, in both cases there are no expectations for policy changes.

The USDJPY is tied to risk-on / risk-off sentiment changes, and that’s precisely where investors should be focusing right on, especially as big economic events are just around the corner.