Sydney session ends off on a quiet note as the market takes no significant positions ahead of the 10 a.m. Fed’s speech providing further indication for rate hike expectations in 2017.
Here are the current expectations:
- Incremental rate hike likely as economy nears full employment and inflation holding strong
- Unemployment rate currently sits at 4.8% and inflation at 2.1%
- China’s January inflation data provides optimism for global growth stimulus
- President Trump poses risk to counter Asian currency “manipulation” devaluation
Since yesterday’s short sentiment on a supply zone test, USDJPY has sold off nicely in the middle of the Tokyo session.
As of the moment, I expect to keep this setup to the short term and exit prior to Yellen’s speech. Rate hike optimism is expected to be a bullish signal for the U.S. Dollar, especially after a successful weekend meeting between President Trump and Prime Minister Abe.
Currently, I am in a EURJPY short trade on a technical level break-out: