Technical Talk:USD/JPY 30-01-2019

USD/JPY: Japanese Yen awaits fresh impulse from the Fed and trade talks
Our preference: short positions below 109.55 with targets at 109.10 & 108.90 in extension.Alternative scenario: above 109.55 look for further upside with 109.70 & 109.95 as targets

Comment:
The USD/JPY trades in mid 109.00s ahead of the US Federal Open Market Committee
(FOMC) monetary policy meeting and US-China trade talks.The US Federal
Reserve isn’t expected to alter present monetary policy but weigh on
recent “patience” calls and possibly balance sheet reduction.
China could respect demand to increase the US import against likely
turning down calls for restructuring the economy and IPR protection.
The Japanese Yen is trading little changed near 109.45 against the US
Dollar on Wednesday around noon in London as global investors eagerly await
Federal Reserve Chairman Jerome Powell’s press conference.
Powell is expected to confirm data dependency in Fed’s rate-hike trajectory.
The Fed is widely expected to offer no change in its present monetary policy.

The beginning of two-day trade talk between the US and China are also on the trader’s radar.
Amid signs that Trump administration’s demand for structural reforms and strict
investors property rights (IPR) protection could hinder the progress.
Chinese delegation including President’s top aide Liu He will meet the
US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin on Wednesday and Thursday.

In light of the latest calls for ¨patience¨ in future monetary policy path,
the Fed might refrain from supporting its earlier view that required “further” policy normalization. Fed is expected to voice its data dependency instead as recent negative data and absence of few statistics due to the US government shutdown.

At the trade front, the US allegations on China’s smartphone giant
Huawei can spoil the start as Chinese foreign ministry remains firm to
protect the interest of their companies. Additionally,
the US demands for restructuring of world’s second largest economy to best
suit the overseas firms might also hinder the path of progress. On the positive side,
China’s readiness to import more of the US productions could be beneficial.

With both the scheduled events less likely to offer any positive signs,
the JPY may rise due to its safe-haven appeal.

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