Wednesday, 28 June 2017
What’s next? – USDJPY 28.06.17
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what’s next
USDJPY
The dollar/yen traded 0.19 percent lower at 112.13 as of 04:55 GMT, giving up some gains from the previous session as traders looked ahead of fresh remarks from central bank leaders.
Bank of England Governor Mark Carney, Bank of Japan Governor Kuroda and ECB President Mario Draghi are all due to speak as of 13:30 GMT.
On Tuesday, the pair settled in green territory, adding 0.43 percent by the end of the session at 112.34. The upside movement was triggered by comments from the European Central Bank President Mario Draghi and Federal Open Market Committee Member Patrick Harker.
The ECB leader opted for a softer rhetoric on the possibility of monetary policy adjustments, explaining that an eventual reduction of quantitative stimulus would have to be gradual.
Draghi is a strong defender of the bank’s bond buying program and low interest rates. In the last few months, he’s been reluctant to the idea of start tightening as he explained that the recent upbeat inflation data in the European Union was the result of a temporary spike in crude prices.
Philadelphia Fed President Patrick Harker provided support for the American currency as he expressed his support to rising interest rates once again later this year.
Another factor weighing on the pair was the rate differential between Treasuries and JGBs. 10Y-Treasury bonds yield was at 2.2 percent and 30Y-Treasury notes stood at 2.745 percent.
While most investors were focused on Fed Chair Janet Yellen’s speech, there were little elements to be excited about. Yellen reiterated that the Fed’s normalization process would have to be slow and be supported by economic conditions.
To extend gains on Wednesday, the USDJPY would have to count on better-than-expected economic data in the United States. As for today, the data front includes goods balance trade and pending home sales. Downbeat data would increase demand of safe-havens.
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