12 Aug 2015
USD/JPY: Greenback benefits from risk-off flows, rises to 125.25
FXStreet (Mumbai) - The US dollar continues to outperform its Japanese counterpart in the mid-Asian session, driving USD/JPY to fresh two-month highs beyond 125 handle, as another round of yuan devaluation by PBOC early today has refuelled risk-off trades across the FX board with traders favouring the US currency as a safe-haven.
USD/JPY supported above 125 levels
Currently, the USD/JPY pair trades 0.08% higher at 125.22, testing a new two-month high reached at 125.20. The greenback enjoys risk-off flows versus the Japanese yen in the Asian session today as markets digest the latest Yuan fix by the PBOC, lowering the reference rate by 1.6% for the second time in two days.
"Today's devaluation in midpoint is based on analysis of fresh economic data and improved quotation mechanism," according to a statement from the PBoC on Wednesday.
On Tuesday the central bank caught markets off guard when it announced a 2% devaluation of the yuan, which the bank claimed was a move aimed at bringing the domestically traded yuan (CNY) in line with the value of the foreign-traded yuan currency (CNH).
Markets suspect the recent price action by PBOC as staging a currency war in attempts to support the export sector and aid the overall economic growth which is likely to keep the ongoing risk-averse environment intact, boosting safe-haven assets such as US dollar, yen, treasuries and gold.
Looking ahead, a slew of Chinese macro releases is highly anticipated which will further set the tone across the FX space. While from the US, FOMC member Dudley’s speech and JOLTS job openings data will also be closely watched.
USD/JPY Technical Levels
To the upside, the next resistance is located 125.69 (June 8 High) levels and above which it could extend gains 125.86 (June 5 High) levels. To the downside immediate support might be located at 124.49 (Aug 11 Low) below that at 124 levels.
USD/JPY supported above 125 levels
Currently, the USD/JPY pair trades 0.08% higher at 125.22, testing a new two-month high reached at 125.20. The greenback enjoys risk-off flows versus the Japanese yen in the Asian session today as markets digest the latest Yuan fix by the PBOC, lowering the reference rate by 1.6% for the second time in two days.
"Today's devaluation in midpoint is based on analysis of fresh economic data and improved quotation mechanism," according to a statement from the PBoC on Wednesday.
On Tuesday the central bank caught markets off guard when it announced a 2% devaluation of the yuan, which the bank claimed was a move aimed at bringing the domestically traded yuan (CNY) in line with the value of the foreign-traded yuan currency (CNH).
Markets suspect the recent price action by PBOC as staging a currency war in attempts to support the export sector and aid the overall economic growth which is likely to keep the ongoing risk-averse environment intact, boosting safe-haven assets such as US dollar, yen, treasuries and gold.
Looking ahead, a slew of Chinese macro releases is highly anticipated which will further set the tone across the FX space. While from the US, FOMC member Dudley’s speech and JOLTS job openings data will also be closely watched.
USD/JPY Technical Levels
To the upside, the next resistance is located 125.69 (June 8 High) levels and above which it could extend gains 125.86 (June 5 High) levels. To the downside immediate support might be located at 124.49 (Aug 11 Low) below that at 124 levels.