The JPY Strengthens after Manchester Suicide Bombing

The USD/JPY currency pair is trading a smidgen lower at 111.143, down 0.1321%. The US dollar index – a broad measure of the USD against 6 currencies – is down 1.24% over the past 5 days, at 96.96. For the year to date, the vaunted DXY is down 5.28%. The selloff that has been taking place with the USD/JPY pair is directly attributed to the suicide terror attack that took place in Manchester. To date, 22 people are confirmed dead and 59 injured. The Manchester arena was the site of unspeakable horror as singer Ariana Grande took to the stage. The bomb was detonated around 10:30 PM on Monday night, and ISIS is claiming responsibility for the attack. As always, terror attacks drive traders to safe-haven assets. In this case, the JPY (Japanese Yen) gained favour.

How is the USD performing?

The US dollar has been struggling in recent days, amid growing concerns that President Trump’s administration is embroiled in scandals. The ouster of FBI director Jim Comey has set the cat among the pigeons, and lawmakers are scampering to find an evidence trail leading back to Trump. This has served to undermine the administration’s objectives of tax breaks, deregulation, immigration security, and the like. Traders naturally unwound their positions on the greenback, sending the USD/JPY pair lower. The JPY is traditionally a safe-haven currency when there is geopolitical volatility in Asia. However, with the recent spate of events, an accelerated appreciation of JPY call positions has taken place.

Important Data Releases Affecting the USD/JPY Pair

That the US dollar has been floundering in recent weeks comes as no surprise. All the buoyancy around Trump Trade has all but evaporated, as market sentiment sours. The yield on 10-year treasury bonds is around 2.2345%, and the most important economic data updates are likely to come from new home sales. The current forecast is a slump of -1.5%, with a previous increase of 5.8%. This will most certainly affect Wall Street indices, and the USD. Negative readings apply pressure to the USD, and this will be good for those going long on the JPY. From the Japanese side, the data is not supportive of a strong JPY. Early Manufacturing PMI data from Japan indicates a drop to 52.0 this month, from 52.7 in April 2017. As the world’s third biggest economy, Japan has certainly got some issues to contend with.

Binary Options Currency Traders Watching the Fed

The USD/JPY briefly hit a multi-day low of around 110.86, before rising to 111.00. If the UK security authorities uncover additional terror plots, the JPY will rally further. For now, the trend is supportive of USD sales and the JPY purchases. Macroeconomic news coming from the US remains lukewarm, and the likelihood of a Fed rate hike on June 14, 2017 is fast diminishing. The latest CME Group FedWatch data tends to suggest a 78.5% likelihood of a rate hike in the region of 1.00% – 1.25% at the June meeting of the FOMC. This is up from the reading on Friday, 19 May (73.8%). A Fed rate hike will almost certainly help the USD somewhat, despite the deluge of lacklustre US economic data releases.

An imminent decision by the Fed, and macroeconomic data releases from the US and Japan will prove critical to the performance of the USD/JPY. Binary options traders will want to watch both sides of the Pacific for indications about which way this pair is trading.