Corona Virus
Stay Safe, FollowGuidance
Fetching Location Data…
James Hyerczyk

The Dollar/Yen inched lower on Friday while posting a second consecutive inside move. The price action suggests investor indecision and impending volatility. Fundamentally, it may mean it’s a toss-up between those who favor the U.S. Dollar for safe-haven protection and those who want to park their assets in the Japanese Yen for safety.

On Friday, the USD/JPY settled at 105.405, down 0.010 or -0.01%.

The tight price action on Friday reflected the tone for the week, whereby, the dollar and the Japanese Yen both posted weekly gains against the major currencies as investor appetite for safe-haven assets, or 0.7% and 0.4% respectively.

Driving investors into the safe-haven currencies was growing market caution over a global surge in coronavirus cases and fading prospects of a U.S. stimulus package before the November 3 election.

Meanwhile, fresh curbs to combat COVID-19 have been introduced across Europe while the U.S. Midwest is also battling record spikes in new cases as data shows the country’s economic recovery is losing steam, Reuters wrote.

US Retail Sales Improved in September

The government reported on Friday that U.S. retail sales accelerated in September, rounding out a strong quarter of economic activity, Reuters reported.

Retail sales jumped 1.9% last month as consumers bought motor vehicles and clothing, dined out and splashed out on hobbies. That followed an unrevised 0.6% increase in August.

Economists polled by Reuters had forecast retail sales would rise 0.7% in September. Some said September’s surge was likely exaggerated by difficulties stripping seasonal fluctuations from the data after the shock caused by COVID-19. Unadjusted retail sales fell 2.8% after dropping 1.0% in August.

Excluding automobiles, gasoline, building materials and food services, sales increased 1.4% last month after a downwardly revised 0.3% drop in August.


US Industrial Output Declines Unexpectedly in September

Industrial Production fell for the first time in five months in September, surprising economists who had expected more steady growth from the factory sector. Industrial output fell 0.6% in September, the first decline after four straight months of gains, the Federal Reserve reported Friday. The decline was well below Wall Street expectations of a 0.4% gain, according to a survey by MarketWatch.

Short-Term Outlook

We expect the FX markets to continue to be dominated by risk considerations, which means the U.S. Dollar and Japanese Yen are likely to maintain their safe-haven appeal.

The direction of the global equity markets could ultimately determine the next substantial move in the USD/JPY. Last week, the inability to reach a fiscal stimulus package seemed to give the USD/JPY a boost, while weakness in the equity markets pressured the Dollar/Yen. We expect these reactions to continue over the short-run.

With the chances of a stimulus deal by November 3 are nearly impossible, we think the price action in the USD/JPY is likely to be largely influenced by demand for riskier assets over the near-term.

For a look at all of today’s economic events, check out our economic calendar.

Don't miss a thing!
Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Trade With A Regulated Broker

  • Your capital is at risk
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.