JPY Analysis 29.10.2019

The US dollar fluctuated in a narrow uptrend range during the Asian session to witness the highest since early August, when it tested the highest since late May against the Japanese yen following the developments and economic data that followed from the Japanese economy and on the eve of developments and economic data on Tuesday By the US economy which includes the launch of the FOMC meeting.

At 05:40 am GMT, the US dollar against the Japanese yen rose 0.03% to 108.98 levels compared to the opening levels at 108.95, after the pair reached its highest level in three months at 109.07, while the pair achieved the lowest during the trading session at 108.94.

The Japanese economy followed the release of inflation data with the release of the Tokyo Consumer Price Index (CPI) which showed growth steady at 0.4% unchanged from the previous month's reading in September, worse than expectations for accelerating growth to 0.7%. The core annual reading of the same index, which excludes fresh food, stabilizes growth at 0.5%, also worse than expectations of 0.7%.

In the same context, the core annual reading of Tokyo's consumer price index, excluding fresh food and energy, accelerated growth to 0.7%, in line with expectations, against 0.6% in September. Otherwise, markets are eyeing the BOJ policymakers' monetary policy decisions and trends and unveiling a statement. Bank of Japan monetary policy on Thursday, ahead of the upcoming press conference of Bank of Japan Governor Haruhiko Kuroda.

On the other hand, investors are currently awaiting the US economy, the largest economy in the world to disclose the housing market data with the release of the annual reading of the S&P House Price Index, which may show the acceleration of growth to 2.1% compared to 2.0% last July, before the We see the release of Existing Home Sales which may show a slowdown in growth to 0.9% vs. 1.6% in August.

This comes in conjunction with the release of the Consumer Confidence reading, which may show an expansion to 128.2 vs. 125.1 in September, leading to the start of the meeting of the Federal Open Market Committee in Washington, which is expected to cut interest rates on federal funds by 25 basis points For the third consecutive meeting to between 1.50% and 1.75%.

In the same context, the markets are looking forward on Wednesday after the end of the second day of the meeting of the Federal Open Market Committee about half an hour of the upcoming press conference of the Federal Reserve Governor Jerome Powell, which will present the decisions and directions of the Federal Reserve Committee, before opening the field for media questions. At the same time, US President Donald Trump has called for further stimulus and interest rate cuts.

Powell noted earlier that the risks to the US economy, including the uncertainty over the trade war between Washington and Beijing, and the dossier of the UK's exit from the European Union, and Trump yesterday expressed his expectations for a trade agreement with China during the Asia-Pacific Economic Cooperation summit. The APEC (APEC) next month, along with Brussels's agreement yesterday to extend the Brexit deadline, limits the chances of a rate cut at the Fed meeting.

Otherwise, investors are also looking ahead tomorrow to reveal the preliminary GDP reading for the US for the third quarter, which may show a slower pace of growth for the world's largest economy to 1.6% vs. 2.0% in the second quarter, and may reflect the preliminary reading of GDP measured in prices For the last quarter, growth slowed to 1.8% from 2.4% in the second quarter.

On Wednesday, the US labor market is set to release preliminary data, with the release of the private sector employment change, which may reflect a slower pace of job creation to 125,000 jobs versus 135,000 in September, hours before the release. On the monthly report on non-farm payrolls and unemployment rates plus hourly earnings for October.

Technical Analysis

USDJPY offered positive trading yesterday to approach our first awaited target at 109.33, reinforcing expectations for the continuation of the bullish trend over the coming sessions, as the price moves inside the ascending channel shown, which supports the chances of breaching the mentioned level to open the way for a visit to 110.50 next.