Last week, strong U.S. retail sales and employment data led to more buying of the U.S. dollar, causing the USD/JPY exchange rate to rise above the important 150 yen level. However, after this increase, Japanese officials made comments to try to stop the yen from weakening further, which pushed the rate back down. This has made the market very sensitive and uncertain.
This week, several U.S. economic reports, including housing data, PMI, leading economic indicators, and the Federal Reserve’s Beige Book, will be released. These reports will help people decide if the U.S. economy is still strong. If the results show a strong economy, the USD/JPY may try to reach 150 yen again. However, Japanese officials may continue to make comments to prevent the yen from weakening too quickly. Although the Federal Reserve is still keeping interest rates lower, people need to be careful about reacting too much to buying U.S. dollars.
Also, this week, Japan will release Tokyo’s Consumer Price Index (CPI) for October, and on the 23rd, the Bank of Japan’s Governor Ueda will give a speech. These could give reasons for the yen to strengthen again.
Moreover, there is increasing political risk between Israel and Iran, and with upcoming elections in Japan and the U.S., the market is expected to stay sensitive.
As the connection between stock, bond, and currency markets is becoming weaker, it may signal that the markets are close to a turning point. It’s important to avoid putting all your positions in one direction.
Note: The above information does not guarantee profit. Please make your own decisions when trading.