Source: Economic Events June 12, 2019 – Admiral Markets’ Forex Calendar
Today, our focus will be on the USD/JPY and the US inflation rate. Last month, the US annual inflation rate came in at 2% for April 2019, 10 basis points higher from 1.9% the previous month, just below forecasts of 2.1 percent.
The question today is whether the rebound in energy prices can be seen today too, allowing prices to stabilise at 2% – the highest rate since last November.
If so, it surely wouldn’t take very long to hear chatter among market participants that the Fed now faces a problem. The reason: after Fed chairman Powell opened the door for a potential rate cut on Tuesday, and the Fed Watch Tool currently shows markets expecting the Fed to cut rates at least once by December, with a probability of over 95%. In addition to that, last Friday saw a weak NFP print with only 75,000 adding further fuel to rate cut speculations.
All in all, we consider the USD/JPY in a potential lose-lose-situation, and that it’s only a question of time until the USD/JPY continues with its bearish performance after the break below the crucial support region around 108.70, following the biggest five-day drop in 2-year Treasury yields since 2008.
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Technically, a drop lower stays an option as long as we trade below 110.70 on a daily time-frame, with a stint as low as 105.00, the region around the January Flash Crash lows, being a serious option for the weeks to come.
Source: Admiral Markets MT5 with MT5-SE Add-on USD/JPY Daily chart (between March 9, 2018, to June 11, 2019). Accessed: June 11, 2019, at 10:00pm GMT – Please note: Past performance is not a reliable indicator of future results, or future performance.
In 2014, the value of the USD/JPY 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%.
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