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May 15 - 09:48 AM

USD/JPY - COMMENT-Trump Bump For USD/JPY Clouded By Claims Miss

By Randolph Donney  —  May 14 - 09:40 AM

USD/JPY surrendered earlier gains that followed Trump's apparent support for a strong dollar nL1N2CW0LU after a smaller-than-forecast U.S. jobless claims drop nL1N2CV2CY increased safe-haven flows into the yen.
That left USD/JPY inside its daily cloud.
Today's 106.78 EBS low is just above Wednesday's 106.74 low and the flat daily cloud base at 106.705, with both days' low bought at the 200-HMA.
The slower-than-expected jobless claims decline fits the context of Powell's warning yesterday nL1N2CV0QFnW1N2C3011 that the recovery from the coronavirus economic shock will take time and possibly require more fiscal and monetary support.
Powell also reiterated the Fed's longstanding aversion to negative rates.
The flattening of the Treasury yield curve shows the markets are thinking lower-for-longer rather than negative rates.
Regardless, Treasuries remain a top safe haven destination, as E-minis shed nearly another 1% and European shares get pummeled.
For USD/JPY, a tight range inside the 106.705-7.30 daily cloud is likely into Friday's U.S. retail sales report.
The 100- and 200-HMAs at 107.11/6.78 are the finer range.

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Refinitiv IFR Research/Market Commentary


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