Yen Enjoys Safe Haven Flows On Doom And Gloom, More To Come?

The next substantial release is on Tuesday with inflation numbers. The all-important Core CPI YoY remained steady at 2.2% in January, and a minor slide to 2.1% is on the cards. Headline inflation stood at 1.6% in the first month of the year, and no change is forecast for February. The steady levels of inflation allow the Fed to remain patient.

The Producer Price Index on Wednesday will provide additional insights into inflation and jobless claims on Thursday may be of interest. The final word of the week belongs to the consumer, which gets to close the week after starting it.

The University of Michigan’s preliminary Consumer Sentiment survey for March is predicted to remain steady at the 93 handles. The numbers are upbeat but off the highs around 100. Consumer confidence is considered a leading indicator of consumption.

Here are the top US events as they appear on the forex calendar:

(Click on image to enlarge)

US forex calendar events March 11 15 2019

Japan: Fewer BOJ decision stands out

Trade talks between the US and China will continue moving markets and risk sentiment. Also, the critical votes in the UK Parliament on Tuesday, Wednesday, and Thursday will likely impact sentiment. If Parliament instructs the government to seek an extension to Article 50, a relief rally could boost USD/JPY.

And towards the end of the week, there is finally a notable event in Japan: the BOJ decision. Governor Haruhiko Kuroda and his colleagues stressed the importance of loose monetary policy, especially as inflation remains far from the elusive 2% target. In their decision on Friday, central bankers are not expected to introduce any new measures. The interest rate will likely remain at -0.10% and the Tokyo-based institution is projected to pledge to keep 10-year yields close to 0%.

However, the BOJ may be tempted to join its peers in some kind of a dovish twist given the economic slowdown.

Pressure on the yen may also come from the Ministry of Finance. The Japanese authorities are not happy with the rising value of the yen which makes Japanese exports less attractive. A verbal intervention could halt the fall of USD/JPY. An outright intervention is unlikely at this point.

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