USD/JPY pulls back from multi-day high after BOJ minutes, eyes on Japan PMI for now
- USD/JPY remains under pressure after BOJ minutes.
- Risk-tone dwindles amid mixed trade headlines, Fedspeak.
- Japan’s Jibun Bank Services PMI, speeches from the Fed policymakers in the spotlight.
Despite BOJ minutes keeping easy money policy on the cards, USD/JPY steps back from late-October high while trading near 109.13 as Tokyo session begins on Wednesday.
Monetary policy minutes of the October month Bank of Japan (BOJ) meeting keep favoring the Japanese central bank’s easy money policy.
The pair rose to October 30 high on Tuesday after the US dollar (USD) surged across the board. In addition to rising calls of an initial trade agreement between the United States (US) and China, upbeat readings of ISM Non-Manufacturing PMI from the US added strength to the buying.
Recent media releases concerning the US-China “Phase One” accord seem to be mixed. While The Telegraph cites China’s demand for a complete reversal of the US tariffs as the key barrier, Fox News came out with the story suggesting a deal to be signed Iowa. Further, Global Times quotes ex-official from China saying that Beijing won’t agree if the US does not cancel some tariffs.
On the other hand, the US Federal Reserve (Fed) policymakers, Dallas Fed President Robert Kaplan and Minneapolis Federal Reserve President Neel Kashkari, keep flashing mixed messages. Mr. Kaplan cited that the present monetary policy is where it needs to be whereas Fed’s Kashkari raised concerns that the US economy is not at full employment yet.
Summarising all is the recent pullback in the US 10-year treasury yields that seesaw near 1.85% after gaining seven basis points (bps) the previous day.
Moving on, traders will now look forward to Japan’s Jibun Bank Services Purchasing Managers Index (PMI) data for October while few other Fed policymakers will closely observe for further direction during the later part of the day. Market forecasts suggest a soft PMI figure of 50.3 versus 52.8 prior.
Technical Analysis
Buyers keep looking for a sustained break beyond August high near 109.32 to question an upward sloping trend line since August 02, at 109.50 now. On the other hand, a daily closing below 50-day Exponential Moving Average (EMA) near 108.05 could drag the pair to October low close to 106.50.