USDJPY analysis 30.04.2020

The US dollar fluctuated in a narrow range slanting toward a decline during the Asian session against the Japanese yen, following the developments and economic data that it followed from the Japanese economy and on the cusp of developments and economic data expected Thursday by the US economy and in the shadows of market pricing to ease restrictions and the close of the global closing, with many announcing Countries reported plans to ease restrictions.

At exactly 6:35 am GMT, the US dollar pair fell against the Japanese yen by 0.18% to 106.49 levels compared to the opening levels at 106.68 after the pair achieved its lowest level during the trading session at 106.41, while it achieved the highest at 106.88.

On the Japanese economy, we followed the release of the seasonally adjusted reading of the retail sales index, which showed a decline of 4.5% against a rise of 0.2% last February, as the annual reading of the same index showed a decline of 4.6% in line with expectations against a rise of 1.6% in February, and that In conjunction with the preliminary reading of industrial production, the decline widened to 3.7% compared to 0.3% in February, beating expectations for a 5.0% decline.

This came before we witnessed the release of the consumer confidence index, which showed a decline to 21.6 compared to 30.9 last March, and in conjunction with the disclosure of housing market data with the release of the annual reading of the index of start-up houses, which showed a decline in the decline to 7.6% compared to 12.3% Last February, it outperformed expectations for a 16.1% decline.

This comes hours after the central bank's monetary policymakers decided at the April 27 meeting, which was shortened for one day as a precautionary measure against the spread of the Coronavirus, to maintain short-term reference interest rates at 0.10%, which came in line with expectations at the time. , With the disclosure at the time of the Bank of Japan monetary policy statement, which reflected the Japanese central bank's further stimulus.

In the same context, last Monday's monetary policy statement indicated that the monetary policymakers of the Bank of Japan raised the ceiling for the purchase of corporate and commercial securities that it pledges to buy to 20 trillion yen from 7 trillion yen in advance, as well as the Japanese central bank’s commitment to purchase quantities of Limited government bonds by eliminating the previous directive to purchase them at an annual pace of about 80 trillion yen.

And the central bank’s monetary policy statement at the time included a paragraph, “The Bank of Japan will purchase the necessary amounts of government bonds without setting an upper limit, so that the yield of 10-year bonds remains at about zero percent,” and this came before we also witnessed at the weekend the press conference held by the governor Bank of Japan Haruhiko Kuroda in Tokyo, in which he stressed that the Japanese central bank is moving forward in providing support to the third-largest economy in the world.

On the other hand, investors are currently awaiting by the US economy the issuance of the index of subsidy requests for the last week on April 25, which may reflect a decline of 927 thousand requests to 3,500 thousand requests compared to 4,427 thousand requests in the previous weekly reading, while it may appear reading requests The ongoing benefit for the last week on the 18th of this month, increasing by 3,262 thousand applications to 19,238 thousand applications compared to 15,976 thousand requests.

This comes in conjunction with the disclosure of personal spending and income data, which may reflect a decrease in personal spending by 4.8% against a rise of 0.2% in February, a decrease in personal income by 1.6% compared to a rise of 0.6% in February, as a reading of the PMI may explain. It fell 0.1% versus a 0.2% rise in February.

It also comes in conjunction with the disclosure of the reading of the unit cost index, which may reflect the stability of growth at 0.7%, little changed from what it was in the last quarter, and before we witness the disclosure of industrial sector data for the largest industrial country in the world with the release of the index reading Chicago Purchasing Managers, which may reflect the widening contraction to 38.0 compared to 47.8 last March.

Otherwise, yesterday we followed the Fed’s monetary policymakers ’decision to keep short-term benchmark interest rates at zero levels between zero and 0.25% at the FOMC meeting April 28-29, which came in line with expectations And, members of the Committee stressed that they are moving forward in using all the tools of the Federal Reserve to support the US economy in these difficult times.

In the same context, members of the Federal Open Market Committee discussed the fact that the outbreak of the Coronavirus has caused human and economic suffering within the United States and abroad and that the preventive measures adopted by countries globally weigh on economic activity and that the decline in demand and the collapse of oil prices reduces inflationary pressures while benefiting That this health crisis will broadly affect economic activity and the labor market in addition to inflation.

The members of the Federal Committee also mentioned that the interest rate on federal funds is expected to remain at zero levels to support the flow of credit to families and companies and that the Federal Reserve is going ahead with the purchase of treasury bonds at $ 500 billion per month and mortgage bonds at least $ 200 per month until the economy has shown signs of recovery following the current crisis and stabilizing prices, as well as an improvement in the labor market.

The Federal Committee also stated that it will continue to follow the economic data and data related to health care and global developments and assess the current and expected conditions within its work to reach the goal of inflation at two percent and achieve the maximum benefit in the labor market, adding that it will monitor the market conditions closely and is ready to amend its tools if It took that.

The decisions and directions of the Federal Committee came yesterday hours after the initial reading of the GDP showed the largest contraction for the United States from the last quarter of 2008 with a contraction of 4.8% in the first quarter before we witnessed the Federal Reserve Governor Jerome Powell at the press conference held in Following the end of the activities of the Federal Committee meeting, he expected his country to shrink its economy in an unprecedented way in the second quarter.

Technical analysis

The dollar versus the yen continues to fluctuate at 106.44, waiting to break this level to confirm the descending wave extension on the intraday and short term, where our next target is located at 105.20.

In general, we continue to favor the bearish trend for the upcoming period, provided stability below 107.68 and 108.05, noting that SMA 50 supports the suggested downside wave.

The expected trading range for today is between 105.70 support and 107.20 resistance.

Expected trend for today: bearish.