The week starts with the Yen in focus and the ranging EURUSD. Following the BOJ Governor Haruhiko Kuroda’s speech early Monday morning, the Yen stays offered.
The Bank of Japan (BOJ)’s leader’s comments regarding the country’s economic growth were generally perceived as dovish by market participants today. This has contributed to USDJPY trimming gains.
Speaking about the general economic environment in Japan, Kuroda said that ‘the labor market conditions have tightened further, the active job openings-to-applicants ratio has continued to rise, marking 1.52 for September and reaching a level seen in 1974’. As an effect, Japan has experienced a drop in unemployment rate of 0.5%, from 3.0% to 2.5%. This, in turn, has led to an increase in earnings, especially for part-time employees, the BOJ Governor stated.
Next, on BOJ’s agenda was the economic activity of the country. Relying on the government’s large-scale stimulating economic growth measures, Kuroda said that BOJ would continue on that path, adding that real GDP projections were positive, reflecting a steady yet moderate economic growth for fiscal year 2017 and 2018 of 1.9% and 1.4%, respectively. These figures, beat BOJ general estimates revolving around 0.5 – 1.0%. In 2019, Kuroda said that Japan’s economy would decelerate slightly, however it would continue to expand, ‘underpinned by the increase in exports on the back of the growth in overseas economies, and the median of the forecasts of the real GDP growth rate is 0.7%’.
At the same time, BOJ leader has expressed the central bank’s openness to review ETF purchases in futures, if ETF buying fails to boost stock prices as expected. He also added that BOJ maintains close collaboration with ECB in an aim to ensure smooth handling of the situation should low volatility shatter the stability of the markets.
Sensitive to these statements, USDJPY started the day around 114.395 – 114.400 with the potential to approach 114.500. The JPY remains offered at this point in time. However, investors need to take into consideration the resistance and support levels of the pair.
Following the NFP release, EURUSD is still ranging around 1.16 – 1.17, close to 1.16057 and slightly above at the moment.
Investors eye the German factory orders and the Eurozone Sentix Investor Confidence releases for more impetus on the single currency. Nomura analysts expect the German orders figure to have increased 0.4% m-o-m in September, following a significant 3.6% m-o-m growth in August.
Meanwhile, the Eurozone Sentix Investor Confidence index is expected to stay positive at 31.0 from 29.7 in October. Optimistic German data is likely to push the EUR upwards to 1.17 against the dollar. Yet resistance and support levels are not to be overlooked in the pair’s trading today.