Yen Gains Much When Markets Watches The Health Vote
By: Eddy Peng Mar 26, 2017
Thursday the U.S. Dollar Index slipped to the two-month low at a fast rate in these two weeks, while its value against the Japanese yen has been experiencing a slump to a low record in recent 4 months, closing at 110.932. Since it already breakout the support located at 111.575, further downside could be seen later.
The sharp depreciation of dollar began last week due to market’s concerns on whether the dismantlement of Obamacare and new healthcare policy supported by Trump administration could successfully pass in House vote. Even worse, no obvious signal showed that this downward trend would reverse or even stop at the moment when House put off vote on Trump’s healthcare.
U.S. President Trump will get a second chance to try to close the deal with Republican lawmakers on dismantle Obamacare, but it was still unclear that in a rescheduled vote on Friday whether the House of Representatives would be able to pass a new healthcare bill which was supposed to be voted on Thursday and be Trump’s first legislative win because its conservative flank felt the bill did not go far enough to repeal Obama’s namesake healthcare legislation, and moderates supposed it could hurt their constituents.
“I’m still optimistic” about reaching an agreement,” Meadows told reporters. The Republicans have a majority in the House but because of united Democratic opposition, can afford to lose only 21 Republican votes.
The effort is seen by financial markets as a crucial test of Trump’s ability to work with Congress to deliver on other priorities like tax cuts and infrastructure spending. The delay pass of Trump’s healthcare means that tax cuts on corporates will be put off as well.
Japanese Merchandise Trade Balance Total in February was released this Wednesday, set to be 813.4 billion yen higher than forecast. It is a measure of “visible” trade, which is trade in goods like cars and electronic. A high positive reading indicates a trade surplus in Japan, leading to a good prospect of appreciation for the yen due to steady demand in exchange for Japanese exports.
Another critical economic data of Japan, All Industry Activity Index in January released as well on Wednesday, reported to be 0.1 percent, beating the forecast of 0.0 percent. The better performance is providing insight into current levels of Japanese economic expansion, thus implying Japanese yen’s current strong performance.
Technically the value of U.S. Dollar against Japanese yen is currently trading with daily supports located at March 17th 2016 low of 110.657 right after the breakout of Feb. 7th low of 111.592. If prices continue to decline next week, traders may look for it to receive some rebound and then potentially breakout lower to next support of April 4th 2016 at 107.616.
Chart 1: USDJPY Daily
Having a glimpse of weekly graph, we can see it is currently trading below the monthly MA(4) and half yearly MA(24), and MA(4) tends to breakout MA(24), which means the possibility of further decrease still exist if it keeps declining in the next few days.
Chart 2: USDJPY Weekly
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