Buy USD/JPY at 109.15 – Westpac

Analysts at Westpac are recommending to go long on USD/JPY pair at 109.15 levels, for the target price of 111.85, while maintaining a stop loss of 108.65.

Key Quotes

“Rationale:

• Week ahead brimming with event risk; US payrolls/ISM, high level US-China trade talks, earnings (20% of S&P500 constituents including bellwethers Apple, Microsoft, Facebook & Amazon), FOMC and China PMIs.
• USD/JPY is basing in a 109-110 range while US10yr yields have stabilised in a rough 2.70-2.80% range. Despite obvious fragilities many of the negatives on the economic data and earnings front have been well telegraphed.
• China unlikely to yield to ambitious requests for a fundamental rewiring of their economy and how they manage it but negotiators likely stress a “constructive” and “hopeful” tone.
• FOMC likely to stress newfound patience and flexibility too; guidance for “some further gradual increases” will be scrutinised as will balance sheet plans. Fed officials seem to be weighing an earlier than expected end to the balance sheet run-off (the statement is devoid of any references but officials have sounded open minded lately, walking back Powell’s “autopilot” signal from the Dec FOMC).”