Trump escalates trade war and USDJPY rejects 109.00

By Admiral Markets

Source: Economic Events 02 August 2019 – Admiral Markets’ Forex Calendar

After the FED rate decision on Wednesday, the USDJPY took a short try to recapture 109.00.

After FED chairman Jay Powell characterised the 0.25% expected rate cut as a mid-cycle adjustment and signalled that markets shouldn’t expect a series of rate cuts now, markets started to price out three further rate cuts by December.

As a result, the USDJPY went back above 109.00, but was pushed significantly lower in the afternoon after disappointing ISM Manufacturing data. Trump then gave the currency pair the kiss of death by announcing 10% new tariffs on Chinese goods from September.

The most likely reason for Trump doing this: the FED rate cut can be considered as an anticipation of a global economic downturn. A downturn which could be triggered by a further trade war escalation between the US and China. And after Trump tweeted his disappointment about the FED rate decision on Wednesday, the new tariff announcement is intended to give Trump what he wants to get from FED: rate cuts, cheap money and fuel for further all time highs in US Equities – no matter what.

That said, into the weekly close the region round 106.80 comes into our focus in USDJPY, and a break lower activates the region around the current yearly lows around 105.00, while only sustainably recapturing 109.00 would brighten the technical picture.

Source: Admiral Markets MT5 with MT5SE Add-on USDJPY Daily chart (between 26 April 2018 to 02 August 2019). Accessed: 01 August 2019 at 10:00 PM GMT

Please note: Past performance is not a reliable indicator of future results, or future performance.

In 2014, the value of USDJPY increased by 13.7%, in 2015, it increased by 0.5%, in 2016 it fell by 2.8%, in 2017 it fell by 3.6%, in 2018 it fell by 2.7%, meaning that after five years, it was up by 4.1%.

Trade Forex & CFDs with Admiral Markets

Professional trading has never been more accessible than right now! Admiral Markets offers professional traders the ability to trade on the Forex market directly and via CFDs with 80+ currencies, including Forex majors, Forex minors, exotic pairs and more! Open your live trading account today by clicking the banner below!

Disclaimer: The given data provides additional information regarding all analysis, estimates, prognosis, forecasts or other similar assessments or information (hereinafter “Analysis”) published on the website of Admiral Markets. Before making any investment decisions please pay close attention to the following:

1. This is a marketing communication. The analysis is published for informative purposes only and are in no way to be construed as investment advice or recommendation. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.
2. Any investment decision is made by each client alone whereas Admiral Markets shall not be responsible for any loss or damage arising from any such decision, whether or not based on the Analysis.
3. Each of the Analysis is prepared by an independent analyst (Jens Klatt, Professional Trader and Analyst, hereinafter “Author”) based on the Author’s personal estimations.
4. To ensure that the interests of the clients would be protected and objectivity of the Analysis would not be damaged Admiral Markets has established relevant internal procedures for prevention and management of conflicts of interest.
5. Whilst every reasonable effort is taken to ensure that all sources of the Analysis are reliable and that all information is presented, as much as possible, in an understandable, timely, precise and complete manner, Admiral Markets does not guarantee the accuracy or completeness of any information contained within the Analysis. The presented figures refer that refer to any past performance is not a reliable indicator of future results.
6. The contents of the Analysis should not be construed as an express or implied promise, guarantee or implication by Admiral Markets that the client shall profit from the strategies therein or that losses in connection therewith may or shall be limited.
7. Any kind of previous or modeled performance of financial instruments indicated within the Publication should not be construed as an express or implied promise, guarantee or implication by Admiral Markets for any future performance. The value of the financial instrument may both increase and decrease and the preservation of the asset value is not guaranteed.
8. The projections included in the Analysis may be subject to additional fees, taxes or other charges, depending on the subject of the Publication. The price list applicable to the services provided by Admiral Markets is publicly available from the website of Admiral Markets.
9. Leveraged products (including contracts for difference) are speculative in nature and may result in losses or profit. Before you start trading, you should make sure that you understand all the risks.

By Admiral Markets