Overnight Forex Wrap: USD/JPY Tumbles Some 50 pips Since London Open

USD/JPY has tumbled some 50 basis points since the London open, logging lows so far near 108.40. This brings back into scope the 108.33 low seen in the early Asia-Pacific session.

Dollar weakness and safe-haven demand for the yen are driving the move. North Korea has escalated tensions by launching a missile over Japan, which comes with shaky political situation in Washington D.C., and as markets try to assess the economic consequences in storm-hit Texas.

Japanese data showed unemployment falling to 2.8% in July and job availability rising for a fifth straight month. USD/JPY trend bias remains to the downside. Resistance at 109.20-22.

Earlier Forex Movements:

03:47 AM EDT:

EUR/USD punched above 1.2000, the first time above this level since January 2015. The common currency has also rallied further into eight-year high territory against the pound, while the euro has reversed most of losses seen in early Asia-Pacific trading versus the yen, with EUR/JPY back within a big figure of the 19-month high seen in early August.

A 16-year high reading of German consumer confidence in the September projection, and strong French consumer spending data, have given the euro some fundamental underpinnings, arriving with the dollar pressured by political and geopolitical concerns, and the still as yet uncertain economic consequences of storm-hit Texas.

EUR/USD’s high so far is 1.2032. Trend support comes in at 1.1944-46, and resistance at 1.2060-62. Action Economics advises following EUR/USD’s trend.

02:28 AM EDT:

The dollar has come under fresh pressure as the London interbank take to their desks. EUR/USD has punched out new 31-month highs, this time above 1.1990, while the narrow trade-weighted USD index hit a 16-month low at 92.06.

USD/JPY dove to a four-month low at 108.33 in early Asia-Pacific dealings before settling in the upper 108.0s. The low was seen following news that North Korea fired a missile that flew over Japan before landing in the sea.

Markets are also factoring the storm damage and disruption in Texas, and a tumultuous political backdrop in Washington DC. This backdrop has maintained dollar weakness and demand for safe havens, such as the Japanese yen.

Japanese data Tuesday showed unemployment falling to 2.8% in July and job availability rising for a fifth straight month, though to little market impact. Elsewhere, cable hit a two-week high at 1.2954, and commodity currencies underperformed.

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