Market closure for Thanksgiving saw the US Dollar edge down from an eight-month high versus the Japanese Yen at the end of the week.
- USD/JPY Exchange Rate News: Thanksgiving sees USD weaken
- JPY Advances on Inflation Data: Tentative signs of price growth
- USD Falls on Overvaluation Fears: Do RSIs point to correction?
- USD/JPY exchange rate forecast: Japanese spending and sales data could further boost inflation hopes
The USD/JPY rate climbed slightly from its worst daily levels on Monday afternoon, holding above the key level of 112.00.
Demand for the US Dollar recovered slightly when American markets opened after weakness in the currency in earlier sessions. This was despite a lack of fresh upward factors in USD trade.
The US Dollar has failed to rise on Monday owing to the latest issue flowing out of the US election aftermath.
The latest source of unrest for US Dollar investors has been the prospect of a Democrat-supporting recount result, which would be a step towards an actual Clinton Presidency.
While this could stabilise the US’s future, it would also represent an unprecedented challenge towards shifting assumed leadership of the country from one leader to another.
The latest USD/JPY FX rates are shown below;
On Tuesday the Japanese Yen to US Dollar exchange rate (JPY/USD) converts at 0.009
Today finds the us dollar to japanese yen spot exchange rate priced at 112.905.
At time of writing the us dollar to euro exchange rate is quoted at 0.945.
The us dollar conversion rate (against swiss franc) is quoted at 1.016 CHF/USD.
Please note: the FX rates above, updated 29th Nov 2016, will have a commission applied by your typical high street bank. Currency brokers specialise in these type of foreign currency transactions and can save you up to 5% on international payments compared to the banks.
Friday saw the US Dollar to Japanese Yen rate weaken, with US markets still closed for part of the session following the Thanksgiving holiday celebrations.
Also keeping trader appetite for USD cool was the fact that expectations of a Fed hike have hit such a high level analysts are becoming concerned that the US Dollar is overvalued.
Relative strength indicators for the USD/JPY exchange rate support claims of overvaluation; at 80, they are significantly above the fair-value score of 50 and 10 points above the level at which the base currency is considered overbought.
Japanese data may have been lacklustre on Thursday, but investors were pleased to see a glacial uptrend emerging, boosting JPY exchange rates.
Year-on-year inflation saw ten basis points of price growth – a welcome sight after six weeks of deflation. The pace of month-on-month inflation also picked up, rising from 0.2% to 0.6%.
Some analysts suggested that the data showed the fall in private consumption had finally bottomed out, indicating a return to growth could be on the cards.
Norinchukin Research Institute Chief Economist Takeshi Minami explained;
‘Private consumption stayed sluggish but it seems to have hit the bottom and it is in the phase of whether it will return to a moderate recovery.’
UOB See US Dollar Bullish
While the USD/JPY exchange rate may have ended the week on the decline, United Overseas Bank holds a bullish outlook for the US Dollar.
According to technical FX strategists at UOB, ‘while the breach of [111.45] was not surprising, the subsequent surge higher that easily took out several major resistances was not exactly expected.’
‘The bullish phase that started 2 weeks ago is clearly intact and the next level to focus on is at 103.80, the minor high seen in late March this year.’
There is little US data on the calendar on Monday, meaning the US Dollar is likely to start the week responding to Federal Reserve hike bets and developments for the Japanese Yen.
Japanese Household Data to Improve Inflation Outlook?
Another slew of Japanese data due on Monday could help improve the inflation outlook in the country, should the reports print favourably.
Year-on-year household spending is expected to continue falling, although a forecast decline of -1.5% represents a significant slowdown on September’s -2.1% annualised drop.
Unemployment is expected to hold steady at 3%, while retail sales are expected to have edged up on the month and declined at a slower pace on the year – both of which would help boost the meagre inflation outlook.