Monday, 4 September 2017

What’s next? – USDJPY 04.09.17

Posted by Valentine at 11:20 Labels:

USDJPY

The dollar/yen was down 0.64 percent as of 06:35 GMT on Monday to trade at 109.53, as market participants flew into safe-haven assets such as the Japanese yen following the test of an hydrogen bomb by North Korea.

The communist country launched its sixth hydrogen bomb as a response to joint military drills between the United States and South Korea in the Korean peninsula. Following the missile launch, Kim Jong-un allegedly said it could be produced in volume.

The United States, Japan, China, South Korea and other countries have already called for an emergency meeting at the United Nations Security Council (UNSC) for Monday to assess the situation and define a common path to counteract the increasing threats.

The gathering will be closely monitored by investors as they try to understand whether it’s time to remain in safe-havens or go back into risky assets. By the time being, no military action seems likely, but rather strengthening sanctions against Pyongyang.

The US dollar index, which gauges the greenback against six major rivals, was trading at 92.59 by the time of this writing, down 0.20 percent.

The USDJPY is now clearly depending on the risk-on/risk-off mood, which can change from one hour to another, making it a very hard pair to trade. In fact, it’s unadvisable to take positions for this pair at this stage if you are just starting your trading career.

Last week, the UNSC also met to analyze Pyongyang’s ballistic missile launch, which flew above Japan’s northern side before falling in the Pacific ocean. No measures were taken.

In economic news, the US Labor Department said on Friday the economy added 156,000 jobs against an estimated 180,000 jobs for August. The unemployment rate rose to 4.4 percent while average hourly earnings advanced 0.1 percent, also down from a predicted 0.2 percent gain.

No relevant economic data is scheduled for the day. From a technical view, the pair is likely to remain close to the 110.00 mark, which now serves as a resistance. In case of breaking above it, we could expect testing at the 110.50 and 111.00 in extension.

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