Japanese Yen Analysis 17-06-2020

The US dollar fluctuated in a narrow range slanting toward a decline during the Asian session, to witness its bounce for the sixth session in nine sessions from the top since March 26 against the Japanese yen, following the developments and economic data that it had reported on the Japanese economy and on the cusp of developments and economic data expected today Wednesday by The US economy, which includes the second half of Federal Reserve Governor Jerome Powell's testimony before Congress on monetary policy.
 
At exactly 06:01 am GMT, the US dollar pair fell against the Japanese yen by 0.07% to 107.24 levels compared to the opening levels at 107.32 after the pair achieved its lowest level during the trading session at 107.17, while it achieved its highest at 107.43.
 
On the Japanese economy, we followed the release of the Trade Balance Index reading, which showed that the deficit narrowed to 833 billion yen compared to 932 billion yen last April, outperforming expectations that the deficit widened to 971 billion yen, as the seasonally adjusted reading of the same indicator showed The deficit narrowed to 601 billion yen from 1.04 trillion yen in April, also beating expectations for a deficit of 680 billion yen.
 
This came after hours of monetary policy makers ’decision with the Japanese central bank at the June 16 meeting, which was held for one day as a precautionary measure against the spread of the Corona virus, to maintain short-term reference interest rates at 0.10%, which came in line with expectations. While also remaining committed to direct the yield of 10-year government bonds at zero.
 
The Bank of Japan revealed yesterday the monetary policy statement through which monetary policy makers touched on the fact that the uncertainty is very high about the impact of the Corona virus on the economy amid the statement that the economy faces a difficult challenge and that private consumption has declined extensively, with the assurance that they will take additional steps to facilitate monetary Without hesitation, if necessary, focus on the effects caused by the coronavirus.
 
It is noteworthy that the Japanese central bank adopted in the previous emergency meeting on the 22nd of last May, more stimulus with the launch of a new lending program in which it aims to direct more money to small and medium-sized companies that suffer from the economic blow to the spread of the coronary virus epidemic, while also benefiting it. At the time, he had extended the deadline for a series of recent actions he had taken to combat the consequences of the Coronavirus.
 
The Bank of Japan also announced last month to accelerate purchases of corporate debt of six months to the end of the current fiscal year on March 31, 2021, and this comes in the wake of the Bank of Japan raising at the meeting in April last, the maximum purchase of corporate bonds and securities Trade, which he pledges to buy to 20 trillion yen from 7 trillion yen previously.
 
We would like to point out that the BoJ also confirmed in April its commitment to purchase unlimited amounts of government bonds by canceling the previous purchase guidance at an annual rate of about 80 trillion yen, as the monetary policy statement included at that time a paragraph, “The Bank of Japan will purchase the necessary amounts from Government bonds without setting a higher limit, so that the yield of 10-year bonds remains at about zero percent.
 
On the other hand, investors are currently awaiting the release of the housing market data by the US economy, with the release of both the beginning construction index and the building permit index, and amid expectations that building permits will reflect a rise to about 1.23 million permits compared to about 1.07 million permits in April. The readings for home construction may also reflect an increase to about 1.10 million homes compared to about 0.89 million homes in April.
 
This comes before we witness the second and last half of Federal Reserve Governor Jerome Powell's testimony about monetary policy before the US Congress, as Powell will today testify about the Federal Reserve’s monetary policy half-yearly report to the House of Representatives Financial Services Committee in Washington via satellite .
 
We would like to point out that the Federal Reserve Governor Powell made yesterday his prepared testimony regarding the semi-annual report of monetary policy before the Senate Banking Committee also via satellite, which he noted through that there is a state of uncertainty about the timing and strength of the potential economic recovery and that the current decline may lead to inequality Within the United States if the order is not contained.
 
Powell also stated that "until confidence returns that the Corona pandemic is under control, a full recovery will not be possible," explaining that "the downward curve continues, and with it the possibility of jobs will continue to be in danger of final loss and business closures," adding that it is unlikely that we will see a full recovery before Restoring economic confidence, while addressing the fact that the epidemic has a greater impact on people with lower incomes.
 
In the same vein, Powell noted that the difference in the rise in unemployment is now from 2008, that at that time there were no jobs, while the matter is now the result of business closures and that with their return, people return to their jobs, and in another context, investors are looking forward to the speech of the President of the Cleveland Bank and the Federal Reserve Board member Federal Open Marketplace Loretta Mester reported on the Federalist response to the Corona pandemic at a Satellite Economic Education Council event.
It is noteworthy that the US Congress has allocated $ 3 trillion so far as financial stimulus that included direct financial distributions for families and plans to exempt from small business loans, while the Federal Reserve has implemented cash stimulus programs exceeding $ 1 trillion to support the credit market for families and companies, the last of which was the launch of the Federal Reserve last Monday for a program that provides a package Loans worth $ 600 billion for businesses that employ around 15,000 people or whose returns exceed $ 5 billion.

Technical analysis

 
The dollar against the yen trades stable below the 107.68 level, to keep the negative pressure in place for the coming period, supported by the moving average 50, which pushes the price down, awaiting the direction towards 106.44, which represents our next main target.
 
On the other hand, it should be noted that breaching 107.68 and holding above it will stop the suggested decline and push the price for intraday gains that start at 109.22.
 
The expected trading range for today is between 106.50 support and 108.00 resistance
 
Expected trend for today: bearish