Forex análisis

USD/JPY: Market seeks for safety ahead of Powell

Equities are under pressure ahead of Powell and after a disappointing Trump’s speech. US
inflation seen posting a modest advance in October, steady at 2.4% YoY. USD/JPY at
weekly lows, decline to steepen on a break below 108.65.

2. Fundamental Overview
The USD/JPY pair is pressuring weekly lows around 108.90, as demand for safety
increased ahead of the US Federal Reserve’s chief Powell testimony before the Congress.
Also, US President Trump, who spoke in the Economic Club of New York Tuesday, failed
to bring relief to markets. He centred his speech on economic growth, criticising the Fed
and menacing to add more levies on Chinese imports if a deal isn’t reached.

Stocks’ markets are firmly lower in Asia and Europe, while renewed demand for
government debt pushed Treasury yields to weekly lows. On the data front, Japan released
the October Producer Price Index, which declined by 0.4% when compared to a year
earlier. For the month, prices at factory levels were up by 1.1%, below the market’s
expectations.

Later today, the US will release October CPI data. Core monthly inflation is expected at
0.2% while, when compared to a year earlier, it is foreseen at 2.4%. There are a couple of
Fed’s speakers scheduled through the American afternoon, but no doubts, Powell testimony
will be the star of the day, as he is expected to explain to a special commission why the Fed
decides as it does.