JPY tumbles as BoJ remains dovish

On a rather easy-going Monday, the greenback wobbled in a sign that USD’s recovery is stalling and attention today is expected to fall on the release of the US construction data, with both the number of building permits and house starts, for November expected to drop and thus may weaken the USD. On the monetary front, the Fed’s pivot seems to continue to weigh on the USD, while any statements of Fed policymakers implying higher rates for longer could contradict market expectations and provide some support for the USD. It should be noted that the hesitation of the USD for any direction tends to be reflected also on gold’s price. On the other hand, US stock markets continued to rise uniformly with mega-cap tech shares leading the way and it’s characteristic that Dow Jones has hit another record high. Should the positive market sentiment continue to characterise the markets we may see US stock markets advancing further.

Across the world, we note the weakening of JPY during today’s Asian session, as BoJ despite remaining on hold, keeping rates at -0.10% as was widely expected, contradicted the market’s expectations for some hawkish hints and implied that the ultra-loose monetary policy settings are to remain in place, keeping its forward guidance practically intact. The bank in its highlighted its supportive role to the Japanese economy and implied that it still is not convinced that the CPI rate will exceed its 2% yoy target in a stable manner, which sounded dovish. We see the case for JPY to continue weakening on a monetary policy level, given that the interest rate differential outlook with other central banks may continue to play an adverse role for the Yen and set it as a selling target for the markets.

USD/JPY rallied during today’s Asian session, breaking the 143.00 (S1) resistance line now turned to support. It should be noted that the rally tends to steepen the slope of the allready upward direction of the price action and we tend to maintain a bullish outlook as long as the upward trendline continues to guide the pair. Further strengthening our case is the RSI indicator which, rose decisively above the reading of 50 implying a build-up of a bullish sentiment for the pair. On the other hand, the price action has hit the upper Bollinger band which may slow down the bulls if not cause a correction lower. Should the buying interest be maintained we may see USD/JPY breaking the 144.45 (R1) resistance line and aim for the 146.30 (R2) resistance nest. Should sellers be in charge of the pair’s direction, we may see USD/JPY reversing course breaking the prementioned upward trendline in a first signal of an interruption of the upward movement continue lower to break the 143.00 (S1) support line and aim for the 141.50 (S2) support base.

その他の注目材料

Today in the European session, we get Eurozone’s final HICP rate for November, UK’s CBI trends for industrial orders, while on the monetary front ECB’s board member Enria, Elderson and policymaker Kazimir are scheduled to speak. In the American session, we note the release of the US building permits and housing starts as well as Canada’s CPI rates all for November, while oil traders may be more interested in the release of the weekly API crude oil inventories figure later on. During tomorrow’s Asian session, we note the release of Japan’s trade data for November.

USD/CAD maintained a sideways motion just below the 1.3400 (R1) resistance line. We tend to maintain our bias for the sideways motion to continue, yet note that the RSI indicator tends to remain near the reading of 30 implying a residue of bearish sentiment in the market that may drag the pair lower. Should the bears take over, we may see the pair breaching the 1.3320 (S1) support line and aim for the 1.3255 (S2) support level, should the bulls be in charge, we may see USD/CAD breaking the 1.3400 (R1) resistance line and aim for the 1.3485 (R2) resistance level.