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Sep 24 - 02:36 PM
USD/JPY - COMMENT-Confidence Drop, Trump Put USD/JPY's Cloud Prop In Play
First appeared on eFXplus on Sep 24 - 11:25 AM

A big drop in U.S. consumer confidence nAQN01B0E4 is dragging down both Treasury yields and the Dollar.
Action has USD/JPY back on a downward path to test key daily cloud top and 21- and 55-DMAs supports at 107.19-20.
A close below these levels would target the kijun at 106.47.
Risk also has come off amid Trump's UN speech that championed nationalism over globalism, while saying all nations have a duty to act on Iran nW1N24J01P.
Trump said the U.S. and Japan will complete their trade deal on Wednesday, but there's no indication of whether the threat of auto tariffs will be lifted as part of that deal.
Earlier today, USD/JPY was boosted by hopes of progress in U.S.-China trade negotiations, Kuroda's comments that steepened the JGB yield curve and the latest Brexit twist that lifted GBP/JPY nL2N26F0IP.
But gains were limited ahead of the tenkan at 107.90 and large 108 expiries.
Risk-reversals remain skewed toward more USD/JPY weakness after last week's highs erased the last of August's trade war escalation sell-off.
Meanwhile, dismal European PMI data will tend keep Bund yields and Treasury yields heavy, allowing Treasury-JGB spreads to narrow due to relatively stagnant JGB yields.
With little key US data Wednesday and Thursday, trade war and Iran headlines will guide risk and USD/JPY.

Chart: Click here

Refinitiv IFR Research/Market Commentary


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