USD/JPY bearish with volatility on positive Tankan

By FXStreet FXStreet (Guatemala) – USD/JPY has been a volatile major within a 50 pip range in cautious markets. The data from Japan was solid in the form of the Tankan survey where large manufacturers beat expectations +12 vs +11 expected in the fourth quarter.

The capex was also very good, with large manufacturers looking to expenditure to grow operations by 15.5% vs 10.9% y/y in September. However, the outlook for smaller businesses was a big disappointment falling to-4 from -2.

For the week ahead, the FOMC will take the attention from here while it is still uncertain how much of a Fed hike has been priced in and what the reaction in the dollar will be on a Fed hike and lift off. Markets expect 25bp’s while noting that Yellen has been very clear that rate hikes will be incremental and small. If there is a dovish hike and rhetoric, the dollar could come under pressure.

USD/JPY levels

Technically, analysts at Brown Brothers Harriman explained that a trend line drawn off the August low (~JPY116.20) and the mid-October low (~JPY118.10) is near JPY120 and rises about five pips a day. “The 61.8% retracement of the dollar’s rally from that mid-October low is …read more

Source:: FX Street