USD/JPY bulls take a breather around 144.00 on BOJ Governor Kuroda’s mixed comments
- USD/JPY pares intraday gains as BOJ’s Kuroda discusses economic fears.
- BOJ’s Kuroda warns of uncertainty, risks to economic outlook but failed to provide clear directions on intervention.
- Firmer yields, risk-aversion keeps DXY on the front foot.
- Risk catalysts, Fedspeak will be important for fresh impulse, intervention news could weigh on prices.
USD/JPY retreats to 143.80 during the two-day uptrend to the initial Monday morning in Europe. The yen pair’s latest weakness could be linked to the mixed comments from Bank of Japan (BOJ) Governor Haruhiko Kuroda, especially amid the hopes of the market intervention and fears emanating from Russia.
BOJ’s Kuroda recently stated that the uncertainty over the economic outlook, particularly downside risks, heightening. The policymaker, however, also added, “Japan's economy picking up, likely to continue recovering.”
The yen pair cheered the market’s rush towards risk safety earlier in the day as a slump in the GBP/USD joined firmer US data and hawkish Fedspeak to propel the chatters over multiple central banks’ intervention to defend respective currencies. While the Bank of England’s (BOE) announcement is looming, the People’s Bank of China (PBOC) said it would raise the foreign exchange risk reserves for financial institutions when purchasing FX through currency forwards to 20% from the current zero, starting on Sept. 28.
Elsewhere, preliminary readings of Japan’s Jibun Bank Manufacturing and Services PMIs for September also failed to provide a clear picture of the Asian major. That said, the Jibun Bank Manufacturing PMI eased to 51.0 versus 51.1 expected and 51.5 prior while the Services counterpart rose to 51.9 from 49.3 market forecasts and 49.5 previous readings.
It should be noted that the weekend comments from the Fed policymakers praised the recently firmer US data and showed readiness to hike the rates. Also keeping the US dollar firmer were the fears emanating from Russia as the West braced for severe sanctions on Moscow’s warning to use nuclear weapons.
Amid these plays, S&P 500 Futures drop half a percent while the US 10-year Treasury yields add four basis points to 3.74% at the latest. It should be noted that the benchmark yields remain firmer at the highest levels since 2010 while the US 02-year bond coupons refreshed the 15-year top to 4.30% at the latest.
Looking forward, news surrounding central banks and Russia will be crucial for intraday traders. Should the market fears more meddling, the USD/JPY pair will have further upside. However, the BOJ’s action might probe the bulls.
Technical analysis
Unless printing a daily close below the 21-DMA level near 142.25, the USD/JPY bulls could keep poking the 13-day-old resistance line near 144.00. That said, a firmer RSI (14) favors the buyers.