U.S.-China trade tensions and global risk aversion kept the yen on top of the forex heap last week. Will this week’s catalysts change the tides for the safe haven?
- BOJ’s core CPI – inflation excluding food and energy prices – came in at 0.3% in September, slower than the 0.4% growth seen in August
- BOJ’s core CPI is scheduled on Nov 26, 5:00 am GMT
- Tokyo’s annualized CPI – widely considered a leading indicator for the national reading – showed 0.5% growth in October
- Analysts expect the figure, due on Nov 28, 11:30 pm GMT to improve to 0.6% in November
- Kuroda recently hinted at even deeper negative rates “within limits” to achieve growth and inflation goals
- Retail trading jumped by 7.1% in September, much faster than the 4.6% growth seen in August
- JPY didn’t move much as traders were more interested in seeing post-sales tax hike figures
- Traders see retail sales dropping by 3.8% in September as the sales tax increase weighs on consumer spending
Lower-tier data dump
- Unemployment rate (Nov 28, 11:30 pm GMT) is expected to maintain its 2.4% reading in October even as job-to-applicant ratio is expected to slip from 1.57 to 1.56 for the month
- Preliminary industrial production (Nov 28, 11:50 pm GMT) could show a 2.0% dip after rising by 1.7% in September
- Annualized industrial production is expected to drop by 5.3% after a 1.3% increase in September
- Household confidence (Nov 29, 5:00 am GMT) is seen at 37.0 after a 36.2 index reading in October
Market risk appetite
- Not a lot of top-tier reports are scheduled from major economies this week, which could bring more attention to U.S.-China trade updates
- All eyes will be on whether a “phase one” deal could be signed within the year, or whether the next set of tariffs worth around $156B due on December 15 could be delayed or watered down
- Unless we see other catalysts, weak PMIs in the European region could also dictate the tone for the safe haven yen for the rest of the week
- Bollinger Bands are hinting that JPY is overbought against CHF, and might be nearly oversold against NZD
- CHF/JPY is bearish on both short and long-term SMAs
- CAD/JPY would’ve also met the conditions if not for the 0.08% gain above the 5 SMA
- GBP/JPY is bullish in the longer-term SMAs but bearish in the short-term SMAs. Watch out for retracements or a reversal!
- USD/JPY could’ve been bullish across the board if it wasn’t 0.16% below its 200 SMA
Missed last week’s price action? Read JPY’s price recap for November 18 – 22!