Yen is Very Calm While Assessing Risks

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Author: Dmitriy Gurkovskiy, Chief Analyst at RoboForex

The currency world remains quite volatile while the commodity market is trying to decide on what direction to trade. However, the demand for the Japanese Yen as a “safe haven” asset is not too high right now, which means that investors consider external risks to be not very significant, although the situation may change in the nearest future.

The currency market may be under pressure unless the political environment in Germany (resignation of the German Minister of the Interior, Building and Community from the position, because he strongly disagreed the current migrant policy in Europe) reaches stability. If the pressure continues, the demand for “safe haven” assets, including the Yen, will go up.

Today’s statistics from Japan showed that the Tankan Manufacturing Index decreased up to 21 points in the second quarter 2018 after being 24 points the quarter before and against the expected reading of 22 points. At the same time, the Tankan Non-Manufacturing Index increased from 23 points in the first quarter to 24 points in the second one.

As a rule, this indicator describes sentiment for large manufacturers and enterprises. Slight decline in this quarter may be temporary and one should wait for the third quarter numbers. We should note that at the beginning of 2018 the Index was also decreasing: probably it was a correction after the indicator reached the highest level over the last 13 years at the end of 2017.

It’s interesting that the components of the report show large companies’ need for labor force. Another risk factor is constantly increasing prices on materials and factory supplies.

In the mid-term, USDJPY is still trading upwards. The pair was being corrected for a while, falling and testing the support line. After another test of the support line, the pair started forming a new rising impulse, has already broken the local resistance level, and may continue the mid-term uptrend. The main upside target may be the resistance line at 113.90. However, before reaching this target, the instrument will have to break the local resistance at 111.75, thus confirming the continuation of the uptrend. The support level for the current movement is at 109.90.

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Disclaimer

Any forecasts contained herein are based on the authors’ particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.

 

Having majored in both Social Psychology and Economics, I went on to continue my education in post graduate. Later I worked as a team lead of a tech and fundamental analysis lab in the Applied System Analysis Research Institute. This helped me to acquire all necessary skills and experience to become a successful trader and analyst, as well as a portfolio manager in an investment company. I'm a pro in the financial field and the author of articles for various international media. I also hold the position of Chief Analyst at RoboMarkets.