​Investors Continue to Buy Out Yen (Weekly Review)

The past week was hardly rich in important events, but in general, some volatility in the foreign exchange market remained, while the dynamics of major currency pairs, especially the British pound, was pretty calm compared to previous weeks, when there was a heat connected to Brexit and attempts to remove Theresa May from the British Prime Minister position. The euphoria associated with May’s preservation of the Prime Minister’s seat had passed, and the GBP paired with the USD consolidated below 1.2700.

The USD remained under the pressure of the EUR, that could, having overcome a number of obstacles in its path, reach the level of 1.1485. However, under the political risks associated with the events in France and the Italian budget, as well as the interest rate differential, the EUR still looked vulnerable, and its growth to the above level was used for sales, against which it was again below the 14th figure. At this stage, there is no reason for the euro to collapse, so in the short term it can consolidate in the range.

The USD suffered a fairly significant loss paired with the JPY. The next wave of sales on stock exchanges contributed to the increase in demand for “safe-haven” assets, which traditionally include the JPY. Thus, the USD, having lost a number of important supports, risks continuing a decline to the psychological level of 110.00. Despite the pessimism about the U. S. dollar resulting from lower forecasts for the Fed's pace of increasing the interest rate, its sales along with the existing differential of interest rates can hardly be justified.

Schedule for this week:

Monday, December 24
13:30 GMT – USA. Chicago Fed National Activity (Nov).

Tuesday, December 25

Wednesday, December 26
12:00 GMT – Japan. Bank of Japan Press Conference and Monetary Policy Statement;
13:55 GMT - USA. Redbook Index (MoM) (Dec 21, 2018);
14:00 GMT - USA. S&P/CaseShiller House Price Index (YoY) (Oct).

Thursday, December 27
09:00 GMT - USA. Economic Bulletin;
13:30 GMT - USA. Initial Jobless Claims;
15:00 GMT - USA. New Home Sales.

Friday, December 28
23:30 GMT - Japan. Unemployment Rate;
23:30 GMT – Japan. Tokyo Consumer Price Index (CPI) excluding fresh products prices;
23:50 GMT - Japan. Industrial Production;
23:50 GMT - Japan. Foreign Investments in Japanese Stocks;
23:50 GMT - Japan. Foreign Bonds Buying;
23:30 GMT - Japan. Retail Sales;
09:30 GMT – United Kingdom.  Gross Mortgage Approvals;
13:00 GMT - Germany. Harmonised Index of Consumer Prices (HICP);
13:00 GMT - Germany. Consumer Price Index (CPI);
14:45 GMT - USA. Chicago Purchasing Managers Index (PMI);
15:00 GMT - USA. Pending Home Sales.

Author: Anthony Porter, IAFT Analyst