This week has seen a mix of dollar strength and yen weakness. Dollar strength was underpinned by the surprising strength in the US employment data at the end of last week, coupled with Federal Reserve Chairman Powell’s denial of the possibility of a rate cut in March. However, the rapid pace of dollar appreciation has led to some adjustment movements, resulting in somewhat subdued upside this week.
Amidst this, yen weakness has emerged. Comments from Bank of Japan Deputy Governor Uchida suggesting that easing measures will continue despite the potential removal of negative interest rates have triggered yen selling. The USD/JPY pair has risen from the 147 yen level to the mid-149 yen level. It has maintained its position near the highs, with the 150 yen level in sight for the coming week. However, despite Bank of Japan Governor Uchida expressing sentiments similar to those of Deputy Governor Uchida in yesterday’s parliament session, the market response has been muted.
In the upcoming overseas markets, whether the adjustment in dollar strength will be completed or not will likely be the key for the upward movement of USD/JPY.
Economic indicators to be announced in the overseas markets include Canadian employment statistics (January). The unemployment rate is expected to rise from the previous 5.8% to 5.9%. Employment numbers are anticipated to show strong growth from the previous increase of 1,000 to an increase of 15,000. While this event is noteworthy for the Canadian dollar, its impact on the overall US dollar is expected to be limited.
The area around 150 yen in USD/JPY continues to be monitored for intervention, making it risky to buy from this level.
Attention will be on Canadian employment numbers and the unemployment rate. If there’s an opportunity, we plan to ride the CAD trend.
