3 Dec 2014
USD/JPY: Not if but when - 120.00-122.00?
FXStreet (Guatemala) - USD/JPY is trading at 119.81, up 0.49% on the day, having posted a daily high at 119.88 and low at 119.13.
USD/JPY seems to be just a matter of time now before the 120.00 level is breached in a market that is testing the barriers and with committed bulls making a collective effort and backing the bid.
That said, it would come at no surprise if markets look to take profits ahead of key data and events approaching and subsequently prefer to tacitly hold off before jumping in at the highest levels seen in seven years.
120.00 is a very psychological level, that even if breached, the question is how much more room is there to go realistically in this rally? The scenario is risking a potential gain of up to, say, 122.00 for 200 pips vs the downside towards 115.00 as the markets move into the holiday season and consolidate on corporate repatriation flows.
Up next, there is the US monthly Nonfarm payrolls report to come and this is arguably the most key data left on the week for FX calendar. However, the ADP gave poor signals today ahead of this data and any surprises to the downside could be painful for the greenback. That said, the monthly growth in this sector and data has been very steady over the last year. The three-month average is 224k. The six-month average looks like 235k, and the 12-month average comes as 226k. There may not be too much at stake if the trend continues this month.
We will then turn attentions over to the mid months lower house snap elections in Japan. The key point is not if, but how many seats the LDP loses. The uncertainty over Abenomics is hardly new news, as suggested by analysts at Brown Brothers Harriman when noting Moody’s recent downgrading of Japan.
“It acknowledges that the delay in implanting the second leg of the sales tax increase and the call for snap elections could be a favourable, but is concerned about the medium term risk to JGB yields and the fiscal credibility”.
It is on this basis that the Yen is likely to remain weak and the 120.00 mark is very much to play for, but the timing of the break and convincing closes is what has become the question of focus currently.
USD/JPY seems to be just a matter of time now before the 120.00 level is breached in a market that is testing the barriers and with committed bulls making a collective effort and backing the bid.
That said, it would come at no surprise if markets look to take profits ahead of key data and events approaching and subsequently prefer to tacitly hold off before jumping in at the highest levels seen in seven years.
120.00 is a very psychological level, that even if breached, the question is how much more room is there to go realistically in this rally? The scenario is risking a potential gain of up to, say, 122.00 for 200 pips vs the downside towards 115.00 as the markets move into the holiday season and consolidate on corporate repatriation flows.
Up next, there is the US monthly Nonfarm payrolls report to come and this is arguably the most key data left on the week for FX calendar. However, the ADP gave poor signals today ahead of this data and any surprises to the downside could be painful for the greenback. That said, the monthly growth in this sector and data has been very steady over the last year. The three-month average is 224k. The six-month average looks like 235k, and the 12-month average comes as 226k. There may not be too much at stake if the trend continues this month.
We will then turn attentions over to the mid months lower house snap elections in Japan. The key point is not if, but how many seats the LDP loses. The uncertainty over Abenomics is hardly new news, as suggested by analysts at Brown Brothers Harriman when noting Moody’s recent downgrading of Japan.
“It acknowledges that the delay in implanting the second leg of the sales tax increase and the call for snap elections could be a favourable, but is concerned about the medium term risk to JGB yields and the fiscal credibility”.
It is on this basis that the Yen is likely to remain weak and the 120.00 mark is very much to play for, but the timing of the break and convincing closes is what has become the question of focus currently.