Tuesday, 19 September 2017

What’s next? – USDJPY 19.09.17

Posted by Valentine at 12:33 Labels:

USDJPY

The dollar/yen was 0.09 percent higher as of 09:20 GMT on Tuesday to trade at 111.67, as the US dollar extended gains across the board helped by easing geopolitical concerns and as the Federal Reserve keeps investors on the watch.

The US dollar index, which gauges the greenback against six major rivals, was slightly lower at 91.67 by the time of this writing, which is no strange as cautious mode ahead of Fed’s monetary policy meeting is an usual thing.

The Federal Open Market Committee kicks off its two-day September monetary policy meeting on Tuesday, with no expectations for changes to the current configuration eyed. However, traders do expect news in regard to Fed’s plan to unwind its massive balance sheet.

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

Short term interest rates currently stand in a range between 1.00 percent and 1.25 percent, and experts believe Fed policymakers are likely to raise once at the end of this year, despite downbeat labor market data and a weak inflation performance seen in the last couple of months.

The pair is very sensitive to interest rate changes as the dollar benefits from a rising rates environment, while the safe-haven Japanese yen looks to the other side.

At this stage, having broken above the 111 mark, the next level seems to be 114.5 and that’s where bullish bets are now pointing. However, it’s a long way up there and sellers could retake control of the pair depending on tomorrow’s Yellen speech. That been said, it’s most recommendable to hold and wait until we count on concrete news.

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