On Monday, USD weakness sent USD/JPY to the 3-week lows. Anyways, USD still has its three trumps – rates, tax reform and the next Fed chairman.
Trump may announce the new Fed Head by November,3. There are 5 candidates for this position. Two of them – Kevin Warsh and John Taylor - are “dollar-positive options” since they both are considered to be the hawks. Another one, Jerome Powell, has a more dovish stance on . If Janet Yellen gets a second chance, it triggers the dollar rally. And the last but not the least, Gary Cohn, is a dark-horse candidate.
USD almost ignored today’s housing data and is still making its way to the north. The bulls now are struggling around 113.00 mark. If USD/JPY takes this level, will it threaten the 114.00 round figure? Unlikely. Now we’re waiting for Japanese export and import data. We expect USD/JPY to return to the mid-112.00 area and wait for some really good triggers.