USD/JPY has been heading south after the March rate hike.  Will non-farm payroll push USD/JPY back above 112?

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Less hawkish Fed statement last month, diminishing hopes on Trump’s economy boosting policies and the recent possibility of penalising “currency manipulating nations” have set the greenback on a downward spiral.  Investors are not getting any assurance the new fiscal policies will be approved.  The FOMC meeting minutes will be released, if it is still lack of clarity on the next rate hike, USD/JPY may continue heading south.  We would also expect the market to speculate on the next rate hike based on the non-farm payroll.  If the data comes close to 200K, we do expect USD/JPY to go beyond 112 again.


Article 50 Invoked

Finally, UK has invoked article 50.  The reaction from the market is as we have anticipated.  There was an initial sell-off but it was short-lived.  GBP/USD recovered much of the losses before market closed. Judging from the price action, market is postponing the decision to short the sterling and decide to focus on the immediate inflation threat.  If all 3 PMIs outperform, we may see the sterling rally continues.


Euro in trouble

Eurozone inflation fell short of expectation.  CPI came in at only 1.5%, down from the previous 2.0%. Emmanuel Macron holds a comfortable lead over Marine Le Pen for now.  If some of you recall, Clinton was leading Trump in the polls but the competition heated up closer to the actual date and the rest is history.  The French election may add more uncertainties closer to the voting day and without CPI returning to 2% or higher, we expect ECB to keep monetary policy loose.


Our Picks

EUR/GPB – Slightly bearish. Consider selling at peaks.

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USD/CAD – Slightly bearish.  Consider selling this pair if price broke support around 1.3280

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XAG/USD (Silver) – Slightly bullish.  Consider going Long once price broke above 18.25.

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Top News This Week (GMT+8 time zone)

Australia: Cash Rate.  Tuesday 4th April, 12.30pm.

We expect figures to remain unchanged at 1.5% (previous figure was 1.5%).

UK: Services PMI.  Wednesday 5th April, 4.30pm.

We expect figures to come in at 52.9 (previous figure was 53.3).

US: Non-farm payroll.  Friday 7th April, 8.30pm.

We expect figures to come in at 181K (previous figure was 235K).



Fullerton Markets Research Team

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