Japanese Yen Buying Likely Today as US Dollar Bulls Await Signal

03/30/2018 11:04 am EST

Focus: CURRENCIES

Robert Savage

Partner & CEO, CCTrack Solutions

If yen prices don’t go up, the pressure on Abe and the BOJ will accelerate and JPY buying maybe something to watch – 100 before 110? In order for USD bulls to get excited you need to burst back over 107.75 (the 55-day), writes Bob Savage, CEO of Track Research Friday.

Today is a holiday and this will be short – there was important news overnight and that will put the holiday weekend in perspective.

Happy Easter and Passover.

Geopolitics first – Trump threatens the South Korea trade pact if the talks with the North don’t have denuclearization as key. “I may hold it up until after a deal is made with North Korea,” Trump said Thursday in his Ohio speech. “Does everybody understand that? You know why, right? Because it’s a very strong card.”

Economics second – the EU flash inflation was higher in Italy and France while in Japan it was lower. The threat of inflation remains central to rate hiking risks and it’s just not conclusive for faster action.

Markets third – the rally extended in Japan and China overnight for equities. The tech jitters have subsided despite Trump bravado on attacking Amazon (AMZN) Thursday.

For trading markets into Monday expect the focus to remain on JPY. The U.S. dollar/Japanese yen (USD/JPY) won’t like the threat of talk failures and linking trade success to North Korea. This linkage will clearly extend to China.

The rebound in equities this week has been in part due to that hope that the South Korea pact foreshadows China talks.

The other point for JPY is in the Tankan where the data on employment and industrial production today highlight risks for a slowing economy and that won’t sit well.

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