USDJPY Climbs on Janet’s Dovish Potentials - 15.11.2013

The next head of Federal Reserve, Janet Yellen, indicated that would maintain current monetary policy of record low interest rates and $85B monthly bond buying amount in order to reduce further unemployment rate and enhance economic performance. US stocks jumped on Janet’s comments as asset tapering seems not likely without further unemployment rate improvement.

The Dow Jones jumped to record high at 15,876.22 rising by 0.35%, the S&P 500 also surged to all time high at 1,790.62 as well as the NASDAQ climbed to record peak at 3,415.47. Risk appetite was well improved by dovish comments of Janet Yellen and that underpinned Asian shares too, with NIKKEI rising 1.95%, Hang Seng lifting 1.85% and Shanghai Composite gaining 1.68%.

Concerning impact on major currencies, the most noticeable change was on the US dollar against the Japanese Yen pair that rose above key resistance at 100 to inch at 100.29 although some profit taking in following immediately eased the pair back to 100.00. Technically, the USDJPY breached to the upside the symmetrical triangle and based on that pattern has increased significantly its upside potential.

USDJPY

The US dollar was under some selling pressure as asset tapering is becoming a distant possibility with the US dollar index calming from 81.14 to 80.82 but mainly still trading in 81.25/80.70 range, we would expect it to continue in that range in the intraday. The Aussie was slightly supported as global equities were rising with the AUDUSD advancing from 0.9306 to 0.9351. However in our view recently established downward formation would weigh on the pair and the last bounce up could be a nice chance to reposition in the market.

On the data front, Euro zone Final CPI data would be released in a while and then in the evening we focus on US Empire Manufacturing Index as well as on US Industrial Production.