USD/JPY bulls in control, seeking a test of the critical 200-DMA
- USD/JPY a stone throw away from the 200-DMA, bulls in charge.
- Risk-on despite the IMF downgraded its 2019 growth projection to 3.0%, the lowest since the GFC.
USD/JPY was heading towards a test of the 200-day moving average overnight in a risk-on market place. The pair were climbing from 108.30 to 108.90 to score a two-month high, a stone throw away from the 200-DMA at 109.07.
Unsurprisingly, the IMF downgraded its 2019 growth projection to 3.0% overnight, the lowest since the GFC. Trade growth is expected to slow to 1.1% this year, down from 3.6% in 2018. However, despite that, risk rallied across the board. The headlines that negotiators are closing in on a draft Brexit deal lifting spirits, despite the risks whereby PM Johnson still faces the obstacle of getting a deal through Parliament. The US and China seeking to finalise the 'Phase-1' deal ahead of the 16-17 November APEC leaders’ meeting was also a plus for Wall Street investors which supported the S&P 500 was higher 1.0% and the DJIA was up 0.9%.
US yields climbing ahead of Fed speakers and key data
Meanwhile, the US 2-year Treasury yields dipped to 1.54% in London before rebounding to 1.62%. The 10-year yield climbed from 1.68% to 1.77%. Analysts at Westpac noted that "markets are pricing 15bp of easing at the 31 October meeting and a terminal rate of 1.25% (vs 1.88% currently)." Looking ahead, we have the Federal Reserve regional presidents Evans and Kaplan, as well as Brainard, speaking at a cryptocurrency conference.
As for data events, we will have September Retail Sales in line where spending has been very strong since Q1."Consensus for Sep is 0.3%mth both overall and for the ‘control group’ core measure. Also due is the Oct NAHB homebuilder sentiment survey, seen holding steady at 68 (% of builders seeing positive conditions)," analysts at Westpac explained.
USD/JPY levels