Chart combined with TradingView
Japanese Yen Fundamental Forecast: Bullish
- Anti-risk Japanese Yen rose as US expansion opinion deteriorated
- Covid cases, lockdowns, mercantile woes might keep USD/JPY lower
- Nikkei 225 might be during risk, Thanksgiving liquidity empty ahead
Japanese Yen, USD/JPY Recap
The Japanese Yen spent many of this past week trade aloft opposite a vital counterparts, including a US Dollar. USD/JPY directed reduce as Treasury yields weakened, creation supervision holds in Japan comparatively some-more appealing to investors. In fact, following some dissimilarity brazen of a US presidential election, USD/JPY now seems to be tracking bond produce spreads between a US and Japan again – see draft below.
The US produce bend flattened as longer-dated supervision bond earnings declined, signaling vanishing certainty in a medium-term outlook. Investors seem to be focusing on a record gait in internal Covid-19 box expansion rather than on certain vaccine news. As a republic reached hospitalization highs, California imposed a late curfew for about 94% of a residents. Texas saw 12,293 cases, violence a prior record from a summer.
Going forward, a anti-risk Japanese Yen appears to be in an optimal position. A miss of profitableness in mercantile support from a US poses a hazard for both internal and outmost equities. This is underscored if some-more states take measures to levy lockdowns to assistance enclose a widespread of a disease. The International Monetary Fund (IMF) warned final week that a tellurian liberation appears to be losing momentum.
Meanwhile in Japan, cases were also environment records. This caused Tokyo to lift a Covid-19 warning standing to a top level. While policymakers refrained from commanding lockdowns, they urged adults to be some-more cautious. The Nikkei 225, Japan’s benchmark batch index, halted a considerable winning strain from progressing this month after shutting during a top given 1991.
For updates on developments in a Japanese Yen and risk trends, make certain to follow me on Twitter @ddubrovskyFX
Finance Minister Taro Aso mentioned that they ‘must kindle view with mercantile policy’. His tinge echoes what a Federal Reserve has been stressing in a US. FOMC minutes might continue to echo this summary with consumer view also on tap. The latter could defect given rising coronavirus cases. It will also be a condensed trade week due to a Thanksgiving holiday, opening a doorway to reduce levels of liquidity.
USD/JPY and Government Bond Spread Relationship
— Written by Daniel Dubrovsky, Currency Analyst for DailyFX.com
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