Monday, 25 September 2017

What’s next? – USDJPY 25.09.17

Posted by Valentine at 11:00 Labels:

USDJPY

The dollar/yen was 0.14 percent up as of 06:15 GMT on Monday to trade at 112.14, with the greenback strengthening across the board in the light of lower geopolitical concerns and as market sentiment continued to improve, boosting risk-on demand.

The US dollar index, which gauges the greenback against six major currencies, was trading at 92.05 by the time of this writing, adding 0.09 percent.

Attention over the weekend was directed to North Korea, where a 3.4 magnitude earthquake was detected on Saturday, rising speculation that another nuclear bomb could have been launched. However, experts pointed out that the quake might be of a natural cause.

South Korea Meteorological Administration said the earthquake started in the northeastern area of Kilju, only 3.7 miles of where Pyongyang conducted its hydrogen bomb test on September 3.

"It could be a natural earthquake that really was man-made, as the nuclear test would have transferred a lot of stress," said Hong Tae-kyung, a professor at the department of Earth System Sciences at Yonsei University.

Last week, the American currency was boosted by remarks from Federal Reserve Chairwoman Janet Yellen, who hinted on the possibility of a third rate hike by the end of this year.

Interest rates are currently standing in a range between 1.00 percent and 1.25 percent. The FOMC decided to leave the current configuration unchanged, but announced that in October the organization will put in motion its plan to unwind the massive $4.5 trillion balance sheet.

According to Fed funds tracked by CME Group’s FedWatch tool, traders are currently pricing in a 71.4 percent probability of a 25 basis points rate hike by December.

There are no major reports due in the American session. Market participants will focus on speeches from FOMC members Dudley and Kashkari as of 12:30 GMT and 22:30 GMT.

As the Bank of Japan continues to insist on monetary stimulus to support the economy, the pair is likely to extend gains, especially once the Fed raises interest rates.

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