USD/JPY Fundamental Daily Forecast – Traders Looking for a Catalyst

The Dollar/Yen is inching higher early Monday on low volume and volatility. The economic schedule is light so the market is likely to react to any political or geopolitical event. Last week, the dollar weakened as investors reduced confidence in President Trump’s ability to pass tax reform and stimulus measures. Investors are also looking ahead to the U.S. Federal Reserve’s annual central banking symposium in Jackson Hole, Wyoming on Thursday and Friday.

At 0524 GMT, the USD/JPY is trading 109.236, up 0.044 or +0.04%.

Forecast

The USD/JPY is going to continue to be sensitive to investor sentiment. Risk-on sentiment will be bullish for the Dollar/Yen. Risk-off sentiment will be bullish for the Japanese Yen.

Stripping away the political and geopolitical events that we can’t predict, the primary focus for investors this week will be the Jackson Hole symposium. We’re not sure what will emerge from the speeches but we have to be ready since they are likely to deal with monetary policy.

Fed Chair Janet Yellen is scheduled to speak at the conference, but after the minutes from the Federal Open Market Committee’s latest meeting showed members expressing concern about soft inflation, she is not likely to give new guidance on Fed policy.

European Central Bank President Mario Draghi will not deliver a new policy message at the Fed conference, two sources familiar with the situation said, tempering expectations for the ECB to start charting the course out of stimulus.

In other news, speculators reduced their negative bets on the U.S. Dollar this week to $8.84 billion from $10.23 billion in the latest week through August 15, according to the U.S. Commodity Futures Trading Commission.

Earlier today, Japan’s All Industries Activity came in at 0.4%, slightly below the 0.5% estimate, but much better than the -0.8% previous read.