Yen Heads for Second Weekly Gain

It's a relatively quiet start to the session with not much for traders and investors to work with. The overall risk mood remains more muted, even if European indices are posting modest gains to follow up the steady showing from yesterday. US futures are flat, so that's not providing much direction on risk appetite.

As such, major currencies are mostly caught in a bind with the dollar at least keeping steadier after a softer showing to start December. The only notable mover on the day is USD/JPY, which is just down 0.2% but starting to trickle below the 155.00 mark as mentioned earlier here.

Besides that, there is not much appetite across other major currencies with EUR/USD locked in by large option expiries while other major currencies are keeping only within 15 pips change of the dollar currently.

At the balance, the dollar is still keeping more vulnerable on the week but the slow bleeding has at least stopped for now.

The key risk events later in the day will be from US data with the Challenger job cuts and weekly initial jobless claims on the agenda. As a reminder, there will be no non-farm payrolls report this week. This article was written by Justin Low at investinglive.com.

There are quite a number to take note of on the board for the day, as highlighted in bold below.

The big ones are for EUR/USD layered across 1.1600 through to the 1.1700 mark, with larger ones centered around the 1.1650 level. That should at least keep price action more concentrated in the current range, with a weaker dollar in general across also helping to keep the pair underpinned this week.

But with the larger expiries, that could limit price movements in the session ahead at least - before the expiries roll off later in the day.

As for USD/JPY, there is one at the 155.70 level. That ties close to the 100-hour moving average of 155.67 currently, so that could help to limit any upside extensions in the session ahead. However, the pair continues to look a little heavier since yesterday amid a softer dollar and the continually reinvigorated expectations of a BOJ rate hike this month. The latest on that from here.

For more information on how to use this data, you may refer to this post here.

Head on over to investingLive (formerly ForexLive) to get in on the know! This article was written by Justin Low at investinglive.com.

The Japanese yen strengthened toward 155 per dollar on Thursday, trading near its highest level in more than two weeks amid growing speculation that the Bank of Japan will raise interest rates this month.

Expectations firmed after BOJ Governor Kazuo Ueda voiced confidence in Japan’s economic outlook and said the central bank would carefully weigh the pros and cons of a rate hike and act as appropriate.

Finance Minister Satsuki Katayama also said this week that there is no divergence between the government and the BOJ in their economic assessments, signaling continued alignment between fiscal and monetary policy.

Externally, the yen gained support from a softer dollar after weaker-than-expected US private payrolls data strengthened bets for a Federal Reserve rate cut next week.

Markets are also assessing the possibility that White House economic adviser Kevin Hassett could replace Fed Chair Jerome Powell in May, a move that could favor more aggressive easing.

Goldman Sachs makes a case that the slow and gradual release of delayed US economic data should "“reveal a softer run rate for the economy, particularly the labor market, that will clear the way for more policy easing and a weaker dollar from here to the end of the year". Adding that early signs should point towards softer momentum, even if so far what we're seeing in the data remains lagged - keeping FX volatility relatively subdued in general.

Besides that, a more stable risk sentiment globally and Fed rate cut expectations will just add to headwinds for the dollar in this period. And then there's also other drivers such as stronger intervention warnings by Tokyo in capping USD/JPY upside, the GBP not wilting after the more benign UK budget, and renewed strength in the CNY - all being supportive factors for a softer dollar across the board.

In tying to the same argument, Credit Agricole pointed to a multitude of different factors in why the dollar should be weaker through year-end. From yesterday: Seasonal patterns, fundamentals point to dollar selling in December - Credit Agricole This article was written by Justin Low at investinglive.com.

The Japanese yen strengthened toward 155.5 per dollar on Wednesday, recovering some losses from the previous session as a softer dollar reflected expectations of deeper US Federal Reserve rate cuts.

Domestically, investors continued to weigh the likelihood of a Bank of Japan rate hike this month following hawkish signals from policymakers, despite the view that Prime Minister Sanae Takaichi’s government favors loose monetary settings.

Meanwhile, Finance Minister Satsuki Katayama noted this week that there is no divergence between the government and the BOJ in their economic assessments, underscoring continued alignment between fiscal and monetary policy.

Katayama’s comments followed remarks from BOJ Governor Kazuo Ueda, who expressed confidence in Japan’s economic outlook and said the central bank would carefully consider the pros and cons of raising interest rates at its December policy meeting.

There are just a couple to take note of on the day, as highlighted in bold below.

They are for USD/JPY at the 155.00 and 156.00 levels. So, that sort of puts a pairs of bookends on price action. But amid the rebound today after the daily close held above 155.00 yesterday, buyers are hoping to try and reclaim back some near-term control. The 156.00 level will be of interest with the 100-hour moving average now sitting nearby at 156.01 before the 200-hour moving average at 156.42. As such, the expiries above adds another layer that needs to be chewed through on any further upside extension in the session ahead.

For more information on how to use this data, you may refer to this post here.

Head on over to investingLive (formerly ForexLive) to get in on the know! This article was written by Justin Low at investinglive.com.