Source: Economic Events September 18, 2019 - Admiral Markets' Forex Calendar
Today, all eyes will be on the Fed rate decision. This is particularly true, as the BoJ rate decision also occurs from Wednesday to Thursday.
In regards to the Fed, the Fed Watch Tool shows that market participants expect a rate cut by 25 basis points with around 80% probability, what means that the main focus of market participants will be concerned with what will be delivered in the Fed statement.
Will the Fed dot plot suggest FOMC members to see further rate cuts in the upcoming 12 – 18 months? Where will the economic projections be, especially with the ongoing tensions in the trade dispute between the US and China.
And after the latest developments in Saudi Arabia, where an attack on Saudi oil facilities responsible for 5% of global supply and resulted in the biggest intra-day percentage gain in oil since the Gulf War in 1991, a near-term pick-up in inflation seems very likely.
The Fed could be assumed to not just reflect the state of the US, but also global economic growth (due to an ongoing trade war between the US and China), rising inflation, on the other hand, leaves the US central bank in a dilemma.
So, it is difficult to say which direction the USD/JPY will be headed after the Fed, but we would assume that a more dovish stance in the Fed's overall rate outlook could trigger USD/JPY weakness.
We will probably have to wait until the BoJ delivers their statement, but our assumption is that one of the main drivers for the USD/JPY to gain further momentum after recapturing 106.80/107.00 over the last week was not only the (at least felt) de-escalation of the US-Chinese trade dispute.
But also rumours made rounds that the BoJ could consider cutting rates into deeper negative territory. Such a step is among the key options of the BoJ, although the central bank may need to accompany that with measures to mitigate the pain any such move could inflict on financial institutions.
That said, if such a step is not brought up in any way, JPY could regain the recent losses, and also result in a drop in the USD/JPY down to and back below 107.00.
Below 108.50/109.00 we consider the picture on a daily time-frame to be bearish with a drop below 105.80 triggering a wave of further selling and quickly activate the region around 105.00 again:
Source: Admiral Markets MT5 with MT5-SE Add-on USD/JPY Daily chart (between June 18, 2018, to September 17, 2019). Accessed: September 17, 2019 at 10:00 PM GMT - Please note: Past performance is not a reliable indicator of future results, or future performance.
In 2014, the value of USD/JPY increased by 13.7%, in 2015, it increased by 0.5%, in 2016, it fell by 2.8%, in 2017, it fell by 3.6%, in 2018, it fell by 2.7%, meaning that after five years, it was up by 4.1%.
Discover the world's #1 multi-asset platform
Admiral Markets offers professional traders the ability to trade with a custom, upgraded version of MetaTrader 5, allowing you to experience trading at a significantly higher, more rewarding level. Experience benefits such as the addition of the Market Heat Map, so you can compare various currency pairs to see which ones might be lucrative investments, access real-time trading data, and so much more. Click the banner below to start your FREE download of MT5 Supreme Edition!
Disclaimer: The given data provides additional information regarding all analysis, estimates, prognosis, forecasts or other similar assessments or information (hereinafter "Analysis") published on the website of Admiral Markets. Before making any investment decisions please pay close attention to the following:
- This is a marketing communication. The analysis is published for informative purposes only and are in no way to be construed as investment advice or recommendation. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.
- Any investment decision is made by each client alone whereas Admiral Markets shall not be responsible for any loss or damage arising from any such decision, whether or not based on the Analysis.
- Each of the Analysis is prepared by an independent analyst (Jens Klatt, Professional Trader and Analyst, hereinafter "Author") based on the Author's personal estimations.
- To ensure that the interests of the clients would be protected and objectivity of the Analysis would not be damaged Admiral Markets has established relevant internal procedures for prevention and management of conflicts of interest.
- Whilst every reasonable effort is taken to ensure that all sources of the Analysis are reliable and that all information is presented, as much as possible, in an understandable, timely, precise and complete manner, Admiral Markets does not guarantee the accuracy or completeness of any information contained within the Analysis. The presented figures refer that refer to any past performance is not a reliable indicator of future results.
- The contents of the Analysis should not be construed as an express or implied promise, guarantee or implication by Admiral Markets that the client shall profit from the strategies therein or that losses in connection therewith may or shall be limited.
- Any kind of previous or modeled performance of financial instruments indicated within the Publication should not be construed as an express or implied promise, guarantee or implication by Admiral Markets for any future performance. The value of the financial instrument may both increase and decrease and the preservation of the asset value is not guaranteed.
- The projections included in the Analysis may be subject to additional fees, taxes or other charges, depending on the subject of the Publication. The price list applicable to the services provided by Admiral Markets is publicly available from the website of Admiral Markets.
- Leveraged products (including contracts for difference) are speculative in nature and may result in losses or profit. Before you start trading, you should make sure that you understand all the risks.