JP Morgan on the yen – narrow ranges to persist

JPM client note on the Japanese yen, say its losing its attraction as a safe haven play

USD/JPY annual range of less than 10% for three consecutive years

  • 2019 range less than 8% (smallest since 1980)

Yen:

  • “when a risk-on mood was strong, market participants would normally actively engage” in the yen-carry trade
  • but when risk-off hit “investors would be pressed to close their positions”  – to sell the higher-yield currency & buy back yen they had sold, which is why the yen would strengthen in risk-off environments 
  • “But because in recent years the yen is no longer being sold off in the first place, it is not acting as much like a safe-haven currency as in the past”

JPM on what will prompt wider ranger:

  • if interest rates increase in other countries (opening a wider gap with rates in Japan)
  • would encourage yen-carry trades

Yeah 1980 might have been a narrow range but as the 80s went on things did hot up (check your historical charts …. google the Plaza Accord)

Probably not about the yen range but its from the 80s (ok, 1979)

ForexLive

Let’s block ads! (Why?)

Forexlive RSS Breaking education feed

Narrow majority of Fed banks wanted to keep discount rate unchanged: minutes

WASHINGTON (Reuters) – Seven out of the 12 regional Federal Reserve banks wanted to leave unchanged the rate commercial banks are charged for emergency loans ahead of the U.S. central bank’s last policy meeting, minutes from the discussion of the discount rate showed on Tuesday.

Despite that, the Fed decided to lower the discount rate to 2.50% from 2.75% at its Sept. 17-18 meeting at the same time that it cut its benchmark overnight lending rate by a quarter of a percentage point to a target range of between 1.75% and 2.00%.

Directors of the Fed banks of Boston, New York, Philadelphia, Richmond, Cleveland, Atlanta and Kansas City all wished to maintain the existing discount rate, citing a “strong labor market and inflation near its symmetric 2% objective.”

The directors of the Fed banks of Minneapolis, Chicago, Dallas and San Francisco pushed for the quarter-percentage-point cut in the discount rate that was ultimately implemented.

The discord echoes the debate among U.S. central bank policymakers about how much slowing global growth and the fallout from the Trump administration’s trade wars are harming the U.S. economy.

Policymakers are split into those who think the Fed’s two interest rate cuts this year suffice for now to keep the longest economic expansion on record going, others who think the Fed should lower borrowing costs more, and some who see a rate rise by the end of the year, according to projections released last month.

St. Louis Fed President James Bullard called for a half-percentage-point cut at the Fed’s September policy meeting. Directors of the St. Louis Fed likewise wanted the discount rate cut to 2.25% ahead of the meeting, the minutes showed.

Investors currently expect another reduction in borrowing costs when the Fed’s rate-setting committee next meets at the end of this month.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Let’s block ads! (Why?)

Economy News

EURUSD higher on the day but still mired in last week’s narrow range

71 pip range last week was the lowest since 2014

The EURUSD had a 71 pips range last week, which was the lowest since 2014.  The range extended from 1.1183 to 1.1254 (see red box). 

71 pip range last week was the lowest since 2014

Today, the price has moved higher from the opening hour and we trade near the high. The move has been able to extend above the 100 and 200 hour MA (and stay above).  Those MAs come in at 1.1224 and 1.12283 currently.  Those MA help to define the risk and bias for traders today. Stay above is more bullish.  Move below and earlier buyers lose hope.  

ON the topside, the pair is running into familiar resistance which has led to some pause. The high today reached 1.12503. That is 4 pips short of the high from last week. A move above willl be eyed by longs looking for more upside, and should solicit new buying as well and have traders looking toward the 38.2% at 1.12842. Above that the 1.12936 and then the 50% of the move down at 1.13154 will be eyed. 

SUMMARY: The move above the 100 and 200 hour MA is something new. Last week, those MAs could not be be broken – and stay broken.  The break today, turns the bias more bullish. The buyers are making a play.  

However, there needs to be a break above the 1.12543 level to give those buyers more confidence of a larger move higher. If broken, we should see traders looking toward higher targets with 1.1284 the next key target.

Let’s block ads! (Why?)

Forexlive RSS Breaking news feed