Trump escalates trade war and USDJPY rejects 109.00
After the FED rate decision on Wednesday, the
USDJPY
took a short try to recapture 109.00.
After FED chairman Jay Powell characterised the 0.25% expected rate cut as a mid-cycle adjustment and signalled that markets shouldn't expect a series of rate cuts now, markets started to price out three further rate cuts by December.
As a result, the USDJPY went back above 109.00, but was pushed significantly lower in the afternoon after disappointing ISM Manufacturing data. Trump then gave the currency pair the kiss of death by announcing 10% new tariffs on Chinese goods from September.
The most likely reason for Trump doing this: the FED rate cut can be considered as an anticipation of a global economic downturn. A downturn which could be triggered by a further trade war escalation between the US and China. And after Trump tweeted his disappointment about the FED rate decision on Wednesday, the new tariff announcement is intended to give Trump what he wants to get from FED: rate cuts, cheap money and fuel for further all time highs in US Equities – no matter what.
That said, into the weekly close the region round 106.80 comes into our focus in USDJPY, and a break lower activates the region around the current yearly lows around 105.00, while only sustainably recapturing 109.00 would brighten the technical picture.
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Disclaimer: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 84% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
USDJPY
took a short try to recapture 109.00. After FED chairman Jay Powell characterised the 0.25% expected rate cut as a mid-cycle adjustment and signalled that markets shouldn't expect a series of rate cuts now, markets started to price out three further rate cuts by December.
As a result, the USDJPY went back above 109.00, but was pushed significantly lower in the afternoon after disappointing ISM Manufacturing data. Trump then gave the currency pair the kiss of death by announcing 10% new tariffs on Chinese goods from September.
The most likely reason for Trump doing this: the FED rate cut can be considered as an anticipation of a global economic downturn. A downturn which could be triggered by a further trade war escalation between the US and China. And after Trump tweeted his disappointment about the FED rate decision on Wednesday, the new tariff announcement is intended to give Trump what he wants to get from FED: rate cuts, cheap money and fuel for further all time highs in US Equities – no matter what.
That said, into the weekly close the region round 106.80 comes into our focus in USDJPY, and a break lower activates the region around the current yearly lows around 105.00, while only sustainably recapturing 109.00 would brighten the technical picture.
Ready to take your trading to the next level? Find out how in Admiral Markets’ new webinar series Trading Spotlight, where our trading experts will be discussing risk management, trading psychology, and their top strategies for trading the world’s most popular markets - https://admiralmarkets.com/education/webinars/trading-spotlight-1
Disclaimer: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 84% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
