USDJPY:
The USD/JPY pair is attracting some buyers at the start of the new week, with the market reversing some of Friday’s sharp corrective decline from the 146.50 area, which represents a three-week high. However, spot prices have retreated slightly in the last hour and are currently trading around the mid-142.00s, representing a gain of less than 0.25% on the day.
The market sentiment, already elevated, received a further boost in response to the announcement of additional stimulus by China over the weekend. As an illustration, the People’s Bank of China (PBOC) has announced that it will instruct banks to reduce mortgage rates. Furthermore, Japan’s incoming Prime Minister Shigeru Ishiba has stated that the Bank of Japan’s (BoJ) monetary policy must remain stimulative in order to support the fragile economic recovery. In addition, the news that the new Prime Minister plans to hold a general election on 27 October, along with mixed Japanese economic data, has undermined the Japanese Yen (JPY) exchange rate and provided support to the USD/JPY pair.
A government report released today showed that retail sales in Japan rose by 2.8% in August year-on-year, compared to market expectations of a 2.3% increase and a 2.7% rise recorded in the previous month. However, this was offset by disappointing industrial production data, which showed a larger-than-expected 3.3% contraction in the month under review, and had little impact on the JPY bulls. However, growing market confidence that the Bank of Japan will raise interest rates again before the end of this year is helping to limit significant JPY losses. Furthermore, the subdued price action of the US dollar (USD) is contributing to a decline in the USD/JPY pair.
Trade recommendation: Trading mainly by Sell orders from the current price level.
Origin: FreshForex
