USD/JPY made a major bearish reversal in late October after the intervention by Japanese authorities such as the Bank of Japan and the Ministry of Finance. That was a decisive move and this pair has been on a strong bearish trend since then, with the smaller moving averages such as the 20 SMA acting as resistance on the daily chart and pushing the highs lower.

This week’s move by the Bank of Japan which changed the policy gave this pair another push lower and the USD has also done its part as it still remains weak. We saw the decline extend 700 pips further to the downside and currently the sentiment remains very bearish for this pair. We saw a retrace higher yesterday, but sellers have returned again after the positive US consumer sentiment for December posted a decent jump as Oil prices declined, although that hurt the USD, with the thinking that the US economy might avoid a hard landing.

US CB Consumer Confidence Report

• Conference Board consumer confidence for December 108.3 points verses 101.0 estimate
• Prior report revised up to 101.4 points from 100.2
• Consumer confidence rises to 108.3 points from 101.4 last month (revise from 100.2 points).
• The estimate was at 101.0 points.
• Present situation Index 147.2 points in December versus 138.3 (revised from 137.4 points)
• Expectations index 82.4 points vs 76.7 last month (revised from 75.4 points).
• 1 year inflation expectations 6.7% in December down from 7.1% in November

From the Conference Board Lynn Franco:

“Consumer confidence bounced back in December, reversing consecutive declines in October and November to reach its highest level since April 2022. The Present Situation and Expectations Indexes improved due to consumers’ more favorable view regarding the economy and jobs. Inflation expectations retreated in December to their lowest level since September 2021, with recent declines in gas prices a major impetus. Vacation intentions improved but plans to purchase homes and big-ticket appliances cooled further. This shift in consumers’ preference from big-ticket items to services will continue in 2023, as will headwinds from inflation and interest rate hikes.”

A better-than-expected report was helped by lower gas prices. The labor view remains upbeat despite chatter about job layoffs at many firms: Consumers were more upbeat about the short-term labor market outlook.

• 19.5% of consumers expect more jobs to be available, up from 18.5%.
• 18.3% anticipate fewer jobs, down from 21.2%.

For the full report CLICK HERE

USD/JPY Live Chart