FOREX: USDJPY Moderates Again as Verbal Jawboning Continues
- Finance Minister Katayama was back on the wires overnight, adding to prior comments in the week relating to the weakening yen and the ability of the MOF to deal with rapid speculatory moves. Katayama expressed that the current agreement with the US means they are able to intervene to address rapid moves in the JPY. Bullish momentum for USDJPY has certainly had the wind taken out of its sails over the past three sessions, and overnight weakness for the pair extended on a break of the prior session lows at 158.23 and 158.10 to print a session low of 157.98.
- Additionally, Japan's main opposition CDP of Japan and Komeito agreeing to form a new political party has also acted as a moderate yen
tailwind, offering some potential resistance to the market concerns surrounding the Takaichi-led fiscal outlook. - The fact that domestic economic factors have been so influential on the latest Yen slide is likely to keep dips for cross/JPY very well supported, with initial USDJPY support moving up to 157.20, the 20-day EMA. Immediate targets for a resumption of USDJPY strength include 159.60 and 160.00, both Fibonacci projection points.
- Outside of the JPY, the USD is mixed against most others after hitting a new year-to-date high on Thursday. The data-tripped dollar rally sees the USD Index within 1% of the strongest levels since May of last year and reflects the hawkish repricing of the front-end of the USD curve and reminds us of the sensitivity of markets to any evidence showing a more stable labour market.
- The dollar will likely follow these cues with a bias to rally amid geopolitical uncertainty (specifically toward Iran and Greenland), further exposing the likes of EURUSD, GBPUSD and AUDUSD.
- Industrial and manufacturing production data from the US is the data highlight Friday, but neither release is likely to sway market conviction from the view that the Fed are unlikely to change policy rates at their Jan28 meeting. This should keep focus instead on the Fed speaker schedule: Fed's Collins, Bowman and Jefferson are all due, and the latter two appearances are set to address the economy and monetary policy directly. Bowman is now only a very outside chance to be nominated as Fed Chair by Trump (Polymarket prices 2% odds), but her view remains influential on the FOMC.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
FED FUNDS FUTURES: FFG6 Sold
FFG6 ~3.2K given at 96.410 over a couple of clips, although small rounds of buying follow, small offer left at typing.
MNI: EUROZONE NOV HICP 2.1% Y/Y (2.2% FLASH, 2.1% OCT)
- MNI: EUROZONE NOV HICP 2.1% Y/Y (2.2% FLASH, 2.1% OCT)
- EUROZONE NOV CORE HICP 2.4% Y/Y (2.4% FLASH, 2.4% OCT)
- EUROZONE NOV SERVICES HICP 3.5% Y/Y (3.5% FLASH, 3.4% OCT)
COMMODITIES: WTI Futures Bounce Well Off Tuesday's Lows
A bearish theme in WTI futures remains intact. Moving average studies are in a bear-mode position, highlighting a dominant downtrend. A key support and the bear trigger at $55.99, the Oct 20 low has been breached. Clearance of this level resumes the downtrend and opens $53.53. Key short-term resistance to watch is $61.84, the Oct 24 high. First resistance is at $59.27, the 50- day EMA. A bullish theme in Gold remains intact. The bear phase between Oct 20 - 28 appears to have been a correction and note that the recovery since Oct 28 signals the end of that corrective cycle. Key support to watch is the 50-day EMA, at $4087.6. Clearance of this EMA would signal scope for a deeper retracement. Attention is on key resistance and the bull trigger at $4381.5, the Oct 20 high.
- WTI Crude up $1.29 or +2.33% at $56.53
- Natural Gas up $0.09 or +2.24% at $3.978
- Gold spot up $15.25 or +0.35% at $4318.89
- Copper up $4.6 or +0.86% at $540.4
- Silver up $1.99 or +3.12% at $65.7637
- Platinum up $82.02 or +4.44% at $1928.66
