The US dollar has bounced a slightly during the trading session on Wednesday, after reaching as low as ¥110.30 and finding a bit of support. With the Americans away it Independence Day, it’s likely that the market just simply did not have enough momentum to do anything of substance.
The US dollar has rallied a little bit during the trading session on Wednesday, but at the end of the day there isn’t much there as far as liquidity is concerned, so it makes sense that we continue to go sideways in general until more traders come back on board. If we can break above the ¥111 level above current trading, then the market is free to go much higher. Otherwise, we could drift down towards the ¥110 level where I would expect to see buyers. The market is currently range bound and consolidating overall, and I believe that this will be the norm as we await the results of the latest tit for tat attacks in the trade war between the United States and China.
Overall, the market will continue to be very difficult to deal with, but I think that if we can get beyond the trade war concerns, it makes sense that this pair goes higher as the interest rate differential is going to be wide enough to drive a truck through, as the Bank of Japan is light years away from doing anything remotely close to monetary policy tightening. However, the market is obviously worried about an expanding trade war that seems to be all but assured, and thereby the markets aren’t necessarily moving on interest rates and seem to be more interested in moving on the latest rumors and comments coming out of politicians mouths.