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20 Mar 2014
USD/JPY looks robust on 102 handle
FXStreet (Guatemala) - USD/JPY is holding its ground after a surge higher in North America when the FOMC tapered its asset purchasing programme by $10B and gave rise to a more bullish/hawkish outlook for the US economy amongst market makers.
USD/JPY jumped through the 102 handle from a channel of subdued activity ahead of the release. The pair was trading between 101.35 and 101.65/70 over the previous 24 hours and had been awaiting the impetus from the FOMC. Strategists at Rabobank explained, The ‘dot plot’ which shows the fed funds rate projections of the FOMC participants indicated that the median forecast for the end of 2015 had moved up to 1.00% from 0.75% in the December projections, and the median forecast for the end of 2016 had moved up to 2.25% from 1.75%. “This hawkish shift pushed up the 10y US treasury yield”. During the Q&A at the press conference, they noted that Yellen said that we should not look at the ‘dot plot’ because the dots will fluctuate, but that the FOMC statement was the primary means of communication. “And the statement said that the change in forward guidance does not indicate any change in policy intentions. However, later she said that there could be six months between the end of QE3 and the first rate hike. This interpretation of ‘considerable time’ only reinforced the market’s perception. Note that this would put the first rate hike by mid-2015”. This outcome coupled with the tepid export growth in Japan that has been a concern for policymakers, who are counting on stronger shipments to help cushion any slide in domestic consumption after the sales tax rise is weighing on the Yen. The Boj could increase stimulus as one measure to help spur domestic growth in Japan that in turn would weaken the currency.
USD/JPY Levels
The 20 DMA is 102.29, the 50 DMA is 102.70 and the 200 DMA is 100.32. RSI (14) reads 61.75 which spot trades 102.36.
USD/JPY jumped through the 102 handle from a channel of subdued activity ahead of the release. The pair was trading between 101.35 and 101.65/70 over the previous 24 hours and had been awaiting the impetus from the FOMC. Strategists at Rabobank explained, The ‘dot plot’ which shows the fed funds rate projections of the FOMC participants indicated that the median forecast for the end of 2015 had moved up to 1.00% from 0.75% in the December projections, and the median forecast for the end of 2016 had moved up to 2.25% from 1.75%. “This hawkish shift pushed up the 10y US treasury yield”. During the Q&A at the press conference, they noted that Yellen said that we should not look at the ‘dot plot’ because the dots will fluctuate, but that the FOMC statement was the primary means of communication. “And the statement said that the change in forward guidance does not indicate any change in policy intentions. However, later she said that there could be six months between the end of QE3 and the first rate hike. This interpretation of ‘considerable time’ only reinforced the market’s perception. Note that this would put the first rate hike by mid-2015”. This outcome coupled with the tepid export growth in Japan that has been a concern for policymakers, who are counting on stronger shipments to help cushion any slide in domestic consumption after the sales tax rise is weighing on the Yen. The Boj could increase stimulus as one measure to help spur domestic growth in Japan that in turn would weaken the currency.
USD/JPY Levels
The 20 DMA is 102.29, the 50 DMA is 102.70 and the 200 DMA is 100.32. RSI (14) reads 61.75 which spot trades 102.36.