USDJPY analysis 26.12.2019

The US dollar fluctuated in a narrow range tilted to the upside during the Asian session, to witness the highest level since December 19 against the Japanese yen following the speech of Bank of Japan Governor Haruhiko Kuroda in Tokyo, in addition to the developments and economic data that he reported on the Japanese economy and on the cusp of developments and economic data Expected Thursday by the US economy.

At 05:53 am GMT, the US dollar pair rose against the Japanese yen by 0.16% to 109.55 levels compared to the opening levels at 109.37 after the pair achieved its highest in a week at 109.57, while it achieved its lowest during the trading session at 109.33.

We have followed the speech of the Japanese Central Bank Governor Haruhiko Kuroda at the Japanese Businessmen Union meeting, and this came before we witnessed by the Japanese economy the disclosure of housing market data with the issuance of the annual reading of the index of start-up houses, which showed the widening of the decline to 12.7% compared to 7.4% in The previous annual reading of last October, worse than expectations, which indicated that the decline could be 7.9%.

We would like to point out that the Japanese Central Bank revealed last week a monetary policy statement that reflected the Bank of Japan’s offer of more flexibility in monetary policy while providing financing facilities for exchanged funds (ETF) with the aim of improving liquidity in the market of exchange-traded funds (ETF), and in In the same vein, the statement also touched upon at the time that "the economy was in the direction of moderate expansion".

The Bank of Japan also stated at the time through the monetary policy statement that the Japanese central bank “will take additional mitigation measures if there is a greater possibility of losing momentum towards achieving the goal of price stability.” This came after the Japanese government implemented in October increasing the consumption tax to 10 % Of 8%, which may weigh on consumer spending in the third largest economy in the world.

It is noteworthy that the Japanese government raised its growth forecast last week for the next fiscal year 2020/2021, which begins with the beginning of next April, to 1.4% compared to its previous forecast last July with a growth of 1.2%, while maintaining its expectations for growth during the current fiscal year, which expires with The end of next March is 0.9%, and this comes in the wake of the Japanese government's recent approval of a $ 122 billion financial package.

The expectations of the Japanese government that came after the progress in the trade talks between Washington and Beijing that resulted in a first-stage agreement between them and the decisive victory of British Prime Minister Boris Johnson in the British parliamentary elections, which limited Britain's chances of leaving the European Union without an agreement, included that private consumption will grow 0.6% In fiscal year 2019 compared to previous expectations 0.9% due to declining consumer confidence.

On the other hand, investors are currently awaiting by the US economy, the largest economy in the world, the release of the index of subsidy requests for the week that expires on December 21, which may reflect a decline of 12 thousand requests to 222 thousand applications compared to 234 thousand requests in the previous weekly reading, This comes amid the aspiration of the US Treasury to reveal its semi-annual report on economic policies and the international exchange rate.