The Japanese yen started the year so confidently that it immediately became the main favorite of the G10. Nevertheless, since the time of the flash crash, the correction has rejected USD / JPY quotes to two-month high levels. The Goldilocks regime, in which stock indices are growing against the fears of the global economy, forces investors to sell funding currencies as part of a carry trade strategy. While the world's leading central banks adhere to a soft monetary policy, the global risk appetite is growing, which blocks oxygen for the yen's fans.
If the 2018th "Japanese" finished the status of the best performer of G10, and the currencies of developing countries, by contrast, became the main outsiders, then the situation in 2019 has radically changed. Investors are no longer frightened by the aggressive monetary restriction of the Fed and rumors about the start of the normalization of the monetary policy of the ECB and BoJ. The Fed focused on a long pause in the rate hike process, while the European Central Bank is ready to launch LTRO, and Haruhiko Kuroda said that if a strong yen threatens to achieve inflation targets, then the Bank of Japan will increase monetary stimulus. In such circumstances, markets do not worry about the lack of liquidity, and the growth of stock indices and low volatility allow players to return to carry trade strategies.
In this process, not the least role is played by the progress in trade negotiations between Beijing and Washington. In 2018, the dollar strengthened, because of the war between the leading economies of the world and because of the flight to refuge assets. In 2019, it was deprived of the main Trump cards, and speculators began to take profits. This is clearly seen in the reduction of net long positions in the US currency, which, nevertheless, are still large.
Dynamics of speculative positions on the US dollar
The yen can not take advantage of the weakness of its main competitor due to the high interest in sales of funding currencies in the framework of the carry trade, but if the macroeconomic statistics for the States continue to deteriorate, the USD / JPY pair will go down. In this regard, the saturated economic calendar in the week to March 1, deservedly attracts the attention of investors to the currency of the rising sun. It is quite sensitive to releases data on the United States due to the high correlation with the yield of US bonds. The decline in interest rates signals an increase in concerns about the deteriorating health of the world's leading economies.
The release of an index of consumer confidence, orders for durable goods, GDP and business activity in the manufacturing sector from ISM can affect the balance of power in the analyzed pair. It will be especially interesting to observe its reaction to the release of data on gross domestic product of the United States for the fourth quarter.
Technically, on the daily USD / JPY chart, there is a short-term consolidation in the range of 110.2-111. The pair's exit beyond its lower boundary will increase the risks of implementing the 5-0 pattern (rebounding from resistance by 61.8% from the Shark model CD wave, with a subsequent decrease in quotations). On the contrary, a breakthrough of resistance at 111 will create prerequisites for the continuation of the rally.
USD / JPY daily graph
