USDJPY has collapsed from our previous sell ideas and could continue lower.
The day ahead has a speech from the Bank of Japan governor and data from the United States.
USDJPY – Daily Chart
The USDJPY exchange rate pierced the 145 support level very strongly and now has the 132 level in sight.
In comments on Thursday, Bank of Japan Governor Kuroda said that Japan's economy is picking up, and he expects CPI gains to shrink next year. He also hinted at continued support for the economy.
The Yen was recently boosted after Bank of Japan board member Asahi Noguchi said the central bank could "preemptively" withdraw monetary stimulus if trend inflation, which includes account wage and services prices, beats expectations and stays above its 2 percent target.
A former supporter of extensive monetary easing, Noguchi said the chances for a near-term exit from the ultra-loose policy were slim. More time is needed to study wages and their ability to support the BOJ's 2 percent inflation target.
ISM manufacturing was a drag on the US dollar in the United States. The manufacturing index was expected to dip below the 50 expansion level to 49.8 but came in lower than expectations at 49.
"With Business Survey Committee panellists reporting softening new order rates over the previous six months, the November composite index reading reflects companies' preparing for future lower output," said Timothy R. Fiore, Chair of the Institute for Supply Management (ISM) Manufacturing Business Survey Committee.
Investors have recently been assessing the comments from Federal Reserve Chairman Jerome Powell on interest rates. Powell hinted at a slower pace of interest rate increases over the coming months.
The United States now has Non-Farm Payrolls numbers ahead on Friday, with the market expecting a headline figure of 200k, which would drop from last month's 261k reading.
Despite this, the unemployment rate is expected to remain at 3.7%.
