US
- The Fed left interest rates unchanged as expected at the last meeting.
- The macroeconomic projections were revised higher, and the Dot Plot showed that the FOMC still expects another rate hike by the end of the year with less rate cuts projected in 2024.
- Fed Chair Powell reaffirmed their data dependency but added that they will proceed carefully.
- The recent US CPI beat expectations on the headline figures, but the core measures came in line with forecasts and the market’s pricing barely changed.
- The labour market remains pretty resilient but there are some signs of softness as seen yesterday with another miss in Continuing Claims.
- The US Retail Sales last week beat expectations by a big margin with positive revisions to the prior figures, suggesting the consumers’ spending is still solid.
- The US PMIs this week showed that the economy now looks more balanced and resilient.
- Fed Chair Powelland other FOMC members continue to highlight the rise in long term yields as doing the job for the Fed and therefore they are expected to keep rates steady in November as well.
- The market doesn’t expect the Fed to hike anymore.
Japan
- The BoJ kept everything unchanged as expected at the last meeting.
- The Japanese CPIlast week showed that inflationary pressures remain high with the core-core reading hovering at the cycle highs.
- The Unemployment Rate last month remained unchanged near cycle lows.
- The Japanese Manufacturing PMI matched the prior reading remaining in contraction with the Services PMI falling but holding on in expansion.
- The BoJ officials continue to repeat that the central bank should keep the current monetary policy.
- The latest Japanese wage data missed expectations again which is unlikely to lead to a more hawkish BoJ in the near future.
- The Tokyo CPI, which is seen as a leading indicator for National CPI, beat expectations today.
USDJPY Technical Analysis – Daily Timeframe
On the daily chart, we can see that the USDJPY pair managed to breach the key 150.00 level and stay above it without any intervention. The buyers might start to have a bit more confidence to push the pair into new highs, although we continue to have some notable bearish signs. In fact, we can see that the divergence with the MACD is getting bigger and bigger and it generally takes just one meaningful fundamental catalyst to change the entire trend. So, this is a big risk to watch out for.
USDJPY Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the resistance has now become support and we can also find the confluence with the Fibonacci retracement level and the red 21 moving average. This is where the buyers should step in positioning for new highs and target the 152.00 level. The sellers, on the other hand, will want to see the price falling below the support and the trendline to invalidate the bullish setup and position for a drop back to the 147.82 level.
USDJPY Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we had a spike yesterday for no apparent reason. It doesn’t look like an intervention though given that it’s too little. The buyers are likely to increase the bullish bets if the price breaks above the counter-trendline and keep targeting the 152.00 level. From a fundamental perspective, the recent drop in Treasury yields, the signs of softness in the US labour market and the beat in the Tokyo inflation data might give the sellers enough confidence to push the pair lower, but we will first need the price to fall back below the 150.00 level.
Upcoming Events
Todaywe will get the US PCE report which is unlikely to change anything for the Fed at this point in time.
See the video below
