USD/JPY: Yen Loses Ground As FBI Clears Clinton

USD/JPY has jumped in the Asian trade on Monday, gaining 1.1 percent and moving above the 104 line. Currently, the pair is trading at 104.30. On the release front, the Bank of Japan released its minutes and Average Cash Earnings posted a gain of 0.2%, matching the forecast.

There are no major US releases on the schedule. On Tuesday, the US releases JOLT Job Openings and the markets will be focusing on the US presidential election. Japan will release Current Account, with the surplus expected to remain at JPY 1.98 trillion.

The BoJ released its minutes from the September policy meeting. Policymakers acknowledged that it “may take time to heighten inflation expectations”, a sentiment stated recently by BoJ Governor Haruhiko Kuroda. The BoJ has lowered expectations about reaching its inflation target of 2.0 percent, saying that this goal is unlikely to be reached prior to 2018. Meanwhile, Average Cash Earnings rebounded in September, recording a gain of 0.2%.

All eyes are on the US presidential election, with the markets clearly preferring a win by Democratic candidate Hillary Clinton. Although polls continue to point to a tight race, Clinton appears to have the upper hand, as she has an easier path to garnering the 270 electoral votes needed to claim victory. The Clinton campaign received a boost as the FBI announced that it had no reason to change its conclusion that Clinton was not guilty of criminal wrongdoing in her use of private emails while she was secretary of state.

There are different market scenarios depending on the actual outcome of the election, with the worst case scenario being a too-close-to-call result. If either candidate fails to deliver a decisive victory, the leadership vacuum and uncertainty surrounding the result could trigger higher volatility in the markets. If the election does spark market volatility, the Federal Reserve could hold off from raising interest rates at its next policy meeting in December.

USD/JPY Fundamentals

Sunday (November 6)

  • 18:50 BoJ Monetary Policy Minutes
  • 19:00 Japanese Average Cash Earnings. Estimate 0.2%. Average 0.2%

Monday (November 7)

  • 10:00 US Labor Market Conditions Index
  • Tentative – US Loan Officer Survey
  • 15:00 US Consumer Credit. Estimate 17.6B
  • 22:45 Japanese 10-year Bond Auction

Upcoming Key Events

Tuesday (November 8)

  • 10:00 US JOLTS Jobs Openings. Estimate 5.67M
  • All Day – US Presidential Election
  • 18:50 Japanese Current Account. Estimate 1.98T

*All release times are EDT

*Key events are in bold

USD/JPY for Monday, November 7, 2016

USD/JPY Nov 6 – 7 Chart

USD/JPY November 7 at 8:15 EDT

Open: 104.15 High: 104.63 Low: 103.82 Close: 104.31

USD/JPY Technical

  • USD/JPY posted gains in the Asian session. The pair recorded small gains in European trade but has retracted
  • 104.32 is a fluid line. Currently it is a weak support line
  • 105.44 is a strong resistance line
  • Current range: 104.32 to 105.44

Further levels in both directions:

  • Below: 104.32, 103.02 and 102.36
  • Above: 105.44, 106.72 and 107.49

OANDA’s Open Positions Ratio

USD/JPY ratio is showing long positions with a majority (56%), indicative of trader bias towards USD/JPY continuing to move higher.

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