USD/JPY for the second time managed to jump up from 111.00. The advance was triggered by the good US data on Friday – GDP growth for Q4 was revised up, and consumer sentiment was favorable. In Japan industrial production has gained pace, though retail sales once again disappointed.
Resistance in the 114.00/115.00 area is strong. Poor risk sentiment is the main reason behind demand for the yen as a safe haven. The outcome of G20 meeting, which may have changed the situation, didn’t impress investors much. On the one hand the policymakers gave a rather good estimate of global economy and finance. On the other hand, there are serious doubts that coordinated action will be taken if necessary. Fiscal stimulus is not planned, so all care on the well-being of the economies will lie on the central banks, in this case on the Bank of Japan. Taking into account the fact that Japanese central bank has few instruments left, the yen might stick to the current levels.
As a result, in order to change this negative risk averse picture, the bulls require good data from America and China. This week the US will release PMI and NFP. Also don’t miss Chinese statistics on Tuesday and Thursday. Japanese economic calendar once again doesn’t represent much interest.
In the coming days we expect the 114.50/111.00 range to persist.