Thursday, 10 August 2017

What’s next? – USDJPY 10.08.17

Posted by Valentine at 11:27 Labels:

USDJPY

The dollar/yen was down 0.03 percent as of 07:45 GMT on Thursday to trade at 110.03, as the Korean crisis continues to keep the greenback under pressure while promoting safe-havens.

On the data front this morning we’ve received Japan’s tertiary industry activity index, which showed no change for July, falling short from an initially expected 0.2 percent build.

As North Korea said it is “carefully examining” a possible missile attack on Guam, an unincorporated territory of the United States in the western Pacific Ocean, the dollar continued to trend lower across the board on fears of a serious conflict escalation.

The US dollar index, which gauges the greenback against a basket of six major currencies, was trading at 93.64 by the time of this writing, recovering by a modest 0.22 percent.

Ahead in the session, market participants will be paying close attention to the release of initial jobless claims, seen at 240,000, and the producer price index for July at 12:30 GMT.

If today’s inflation report and tomorrow’s consumer price index outperform analysts expectations, we could see a recovery of the dollar as traders would assess higher chances of a Federal Reserve interest rate hike later in the year.

According to Fed funds tracked by CME Group’s FedWatch tool, traders are currently pricing in a 42.5 percent probability of a third 25-basis points rate hike by December.

Last month, the US regulator decided to leave its short-term rate in a range between 1.00 percent and 1.25 percent, although it assured a third hike is still part of the plan.

However, in order to move forward with the monetary policy normalization process, the Federal Open Market Committee needs to see evidence of growing inflation and a solid labor conditions.

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