Currency Insight

USD/JPY attempts tepid recovery in Asia, tests 124

The USD/JPY pair posed a minor recovery in the mid-Asian trades, as the USD bulls jumped back into the bids mainly driven by a short-covering rally after the major dropped sharply to fresh three-week lows on Wednesday following the release of FOMC minutes which surprised the markets to the downside..

Currently, the USD/JPY pair trades 0.11% higher at 123.94, finding it difficult to regain 124 handle. The dollar-yen pair keeps the bid tone intact in Asia, extending its recovery mode from 124.68 levels reached as the US dollar fell further in to losses after the Fed minutes turned out to be dovish, with no clear sign of an imminent September hike..

Dovish FOMC minutes keep USD undermined in Asia, UK Retail Sales eyed

Broad based US dollar weakness persists in Asia, lifting most G10 currencies across the FX board. The European currency was biggest gainer, sitting firmly above 1.11 barrier. Kiwi also climbed higher despite weak NZ fundamentals, while the gains in the Aussie were checked on tumbling Chinese equities amid no rescue effort seen from the Chinese authorities so far. USD/JPY is striving for 124 handle, staging a comeback from previous drop somewhat.

A relatively data-quiet Asian session, with most Asian currencies enjoying gains from broad based US dollar weakness induced by the dovish FOMC July 29 meeting. Despite, persisting greenback softness, USD/JPY tries to recover lost ground mainly driven profit-taking after the recent fall.

The minutes last night revealed that the policymakers at the Federal Reserve thought that the jobs market was near the point that would justify a rate hike, but the inflation side of the mandate remained a major obstacle for the first increase in benchmark interest rates in almost a decade.

Pound falls to 2-week lows vs. stronger dollar

The pound fell to two-week lows against the U.S. dollar on Tuesday, as expectations for a U.S. rate hike in the coming months continued to lend broad support to the greenback.

GBP/USD hit 1.5385 during European morning trade, the pair’s lowest since May 8; the pair subsequently consolidated at 1.5415, sliding 0.36%. Cable was likely to find support at 1.5241, the low of May 8 and resistance at 1.5591, the high of May 20. The dollar was boosted after Federal Reserve Chair Janet Yellen reiterated Friday that the bank still expects to start raising interest rates later in the year if the economy continues to improve as expected.

Important events and their explanation:
Time ( IST) Currency Economic Data Expectation Previous
12:15pm USD FOMC Member Williams Speaks
2:00pm GBP Retail Sales m/m 0.40% -0.20%
6:00pm USD Unemployment Claims 272K 274K
7:30pm USD Existing Home Sales 5.45M 5.49M
USD Philly Fed Manufacturing Index 6.9 5.7

 

Explanation:- Out of the above data’s US Unemployment claims and Exiting home sales would considered as the most important. We assume above data’t to come positive which would be positive for the USD.

Quick Glance :
Instrument Price %Chg Volume OI
USD/INR 65.24 0.17 788526 960103
EUR/INR 72,57 -0.82 37048 48836
GBP/INR 102.24 0.07 21059 41217
JPY/INR 52.63 -0.64 7908 15311
Technical touch :

FOREX USDINR_Daily_1Year

After China’s currency war, USDINR pair lost its sheen and traveled above 65.00 marks. Looking at the current macro picture we assume INR might further fall till 65.60 levels after fall till 65.10 levels.

 

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