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Yen tumbles ahead of BoJ meetingThe Japanese yen has reversed directions on Wednesday and is sharply lower. USD/JPY is trading at 128.54 in the North American session, up 1.04% on the day. The Bank of Japan holds its policy meeting later today, but investors shouldn't expect any major moves. The central bank has done little more than jawbone as the yen continues to fall. It's been a miserable April for the currency, as USD/JPY has surged 5.50% and is closing in on the symbolic 130 level. The BoJ is unlikely to intervene in order to combat the yen's slide, and Governor Kuroda has said on more than one occasion that a weak yen is good for the Japanese economy. Still, the BoJ does not like to see such sharp movements in the exchange rate, and we could a tweak in policy in order to give a lift to the ailing yen. The BoJ has been far more interventionist when it comes to yield curve control. Earlier this week, the Bank made an offer to purchase an unlimited amount of 10-year JGBs, in order to cap yields at 0.25%. This marked the third time since February that the BoJ has stepped in to protect its yield curve control, a centrepiece of its ultra-loose policy. Japan hasn't been immune to the global surge in inflation, but with CPI well below 2%, the BoJ isn't all that concerned with inflation and shows no signs of changing monetary policy. USD/JPY risk remains heavily tilted higher, primarily because of the US/Japan rate differential, which continues to widen. The Federal Reserve is in full throttle, with an oversize half-point hike almost a given at next week's policy meeting. Fed Chair Powell and other FOMC members have telegraphed that further 0.50% hikes are on the table, as the Fed prepares to come out with guns blazing to subdue inflation, which has become Public Enemy No. 1. USD/JPY has broken above resistance at 128.07. Above, there is resistance at 1.2989 USD/JPY has support at 1.2674 and 1.2492
by OANDA
USDJPY: Something's gotta giveJapanese officials are getting very uncomfortable with the recent yen weakness. USDJPY sliced through 128 earlier, and looks set for a move to 130 in no time. Finance Minister Suzuki repeated his mantra that “Stability is important and sharp currency moves are undesirable”. Then he took it a step further, questioning the merit of the weak yen policy... “Weak yen has its merit, but demerit is greater under the current situation where crude oil and raw materials costs are surging globally, while the weak yen boosts import prices, hurting consumers and firms that are unable to pass on costs.” Suzuki added, “we will closely communicate with the U.S. currency authorities to appropriately deal with this issue.” And he'll meet with Janet Yellen on the side lines of the G20 summit to do just that. Any response is more likely to treat the symptoms rather than the causes, but it suggests that the speed of the recent moves has Japan's Ministry of Finance and the Bank of Japan sufficiently concerned to push back. Structurally, there's not much they can do other than try and smooth out the volatility. US yields keep on rising while Japanese yields are stuck below the 0.25% level (the BoJ has already been forced to step in and defend the yield cap), which drives traders to buy USD and sell JPY. An interesting aspect to note here is with USDJPY ticking towards 130, we're seeing the Japanese 10 year yield push against the 0.25% yield cap - which in my mind feels like something will break. The weak yen is making imports (even) more expensive, which just makes the problem worse for an economy which is highly import dependent across all sectors. 130 is a level that's been flagged as a potential pain point for a while, and US 10y yields (which typically correlate with USDJPY) are also within touching distance of 3%... Summing up, be on the lookout for further statements or actual intervention in the next few days, and don't be certain it'll be easy to get long from here, but we believe a bit more pain is to come as our datasets are suggesting that retail traders are net short USDJPY 75:25 (shorts vs longs).
by FinkPro
23
Japanese yen extends slideIt was another rough week at the office for the Japanese yen, as USD/JPY fell 1.67%. The crumpling yen hasn't eked out a daily gain since March and has extended its losses today. In the North American session, USD/JPY is trading at 126.88, up 0.42% on the day. The yen is essentially at the mercy of the US/Japan rate differential, and with that differential continuing to widen, the yen continues to head south. US 10-year Treasury yields rose to 2.87% earlier today, their highest level since 2019. The outlook for USD/JPY remains bearish and we could see the symbolic 130 line fall in the short term. The US Federal Reserve is in hawkish mode, and has telegraphed its intent to increase rates by 0.50% at the May 4th meeting. CME's Fed Watch has set the likelihood of this scenario at 88%, meaning it's a done deal unless there is some drastic, unexpected development ahead of the meeting. The Fed is scrambling to fend off spiralling inflation, which hit 8.5% in March, a 40-year high. With investors looking for clues about how tight the Fed plans to go, comments from senior Fed officials will be carefully scrutinized and could be market-movers. Later today, Fed President James Bullard, one of the most hawkish FOMC members who favours aggressive action from the central bank, will deliver public remarks later in the day, and the markets will be all ears. USD/JPY pushed above its multi-year high of 125.80 last week and the upswing shows no signs of easing. The Bank of Japan has expressed its uneasiness at the rapid fall in the yen's value, but has refrained from anything more than "jawboning" about the issue. It's unlikely that the BoJ will intervene except as a last resort in order to keep 10-year JGB yields below 0.25%, which the Bank has designated as its line in the sand. USD/JPY continues to climb and break above resistance lines. The pair faces resistance at 1.2740 and 1.2837 There is support at 125.72 and 1.2475
by OANDA
1
USD/JPY - Running into Major ResistanceThe rally in USD/JPY has massively accelerated in recent weeks as markets and the Fed have become increasingly hawkish on US interest rates. This has happened at a time when many central banks are heading in that direction, even the ECB which at one point looked years away from interest rates above 0%. While they haven't yet conceded on the kind of rate hikes that the markets are pricing in, they're certainly heading in that direction. The BoJ is the outlier here. Inflation is higher but core remains stubbornly low, meaning the pressure on the central bank to raise rates is basically non-existent. But rather than allow policymakers to sit back and bask in their good fortune, being the outlier has presented other challenges, most notably around the central bank's yield curve control (YCC) policy. When central banks around the world have rock bottom interest rates, maintaining YCC is quite straightforward. Rates may fluctuate a little but broadly speaking, keeping them within certain limits poses no major threats. When yields around the world are rising and countries are experiencing high inflation, suddenly JGBs start seeing their yields rise in tandem and the BoJ is forced to defend those caps which can pose some problems, as we're seeing. At a time when the US is raising rates aggressively, the BoJ is being forced to buy unlimited JGBs in order to keep a cap on yields which is sending the USD/JPY pair soaring. In some ways, this is good for Japan and its exporters. In other ways, it's not so good as they also import a lot, including energy which is already very expensive right now. But the general rule of thumb for policymakers is there is no defined good or bad level for currency, rather a belief that the speed of those moves matters much more. Rapid appreciation or depreciation (as we're now seeing) can be problematic. So the recent moves have prompted speculation that something needs to happen. That could be FX interventions from the Ministry of Finance or a shift in the YCC policy from the BoJ, perhaps widening the band or lifting the level it wishes to hold the yield around. From a technical perspective, the USD/JPY pair has quickly risen to a level where it has previously backtracked from, both in 2007 and 2015. It's this knowledge that may have contributed to the profit-taking we saw yesterday and today. A move above here would be a potentially massive step and may make the MoF and BoJ nervous. A move below the ascending trend line could signal a deeper corrective move, although that could quickly attract interest given the scale of the move that preceded it. Signs of either of the previously mentioned measures could see that wane but until then, things could get uncomfortable for policymakers as the divergence between Japan and most other countries continues to widen.
by OANDA
USDJPY (Full Review)The dynamic strength of the greenback This strength lies in the lust to expand from the base (= the tendency towards 103xx-104xx) and further in the circumstances where technical breaks occurred or are made possible. Seller's outpost at December 2016 highs is falling apart from the Fed superiority. Buyer's are now showing that momentum can be keenly exercised in the break above 118.6x. An examination of the before and after gives an undoubted advantage to buyers. The Yen as endgame weakness Critical for an evaluation of the issues raised is the fact that the war/sanctions are causing Japan to lose much of its glory to the Panda. There is no longer any likelihood of shifting gears. Japan has not yet somehow managed to get going again in the middle game and it looks inevitable. Yen is suffering a lot not only because of BOJ isolation and need of protecting, but also because the technicals are so weak. Consider for example when we were sitting at 108xx with an ABCDE slingshot. Now it is clear...The triangle was used for centralising and manoeuvring to form a gateway. All possible movement ever since has been with an impressive degree of one-sidedness; the latest break of 118.6x is unlocking 126xx in the coming weeks/months. Let's sum it up: Buyers are still aiming for the 150 target in an ABC that appears to be a done deal once above 125.8x, whereas sellers remain extremely weak. In addition with quad witching now cleared, the 118.6x break is important unlocking a structural 'crash' and burn momentum move in Yen for this week onwards.
Long
by ridethepig
8
Japanese yen falls to five-year highThe US dollar continues to pummel the Japanese yen. USD/JPY pushed above the 117 line earlier today for the first time since January 2017. USD/JPY is up 0.61% on the day and has recorded a massive gain of 1.76% this week. We continue to see sharp volatility in the currency markets and the Japanese yen has not been immune to the turbulence. Risk apprehension has been fluctuating, depending on developments in the Ukraine crisis. Like the US dollar, the yen is also considered a safe-haven currency, but with the US economy in much better shape than that of Japan, the US dollar has been the big winner from the recent turbulence we're seeing in the markets. As well, commodities are priced in US dollars, so the recent surge in commodity prices has boosted the US dollar. If the Ukraine crisis worsens and commodity prices continue to soar, it is entirely feasible that the USD/JPY will continue its upswing and break above the 120 line. In the US, headline CPI continued to accelerate, with a gain of 7.9% for February YoY. This matched the forecast and was up from 7.5% beforehand. With inflation running at 40-year high, there's little doubt that the Fed will raise rates at next week's meeting, most likely by 25 basis points. Japan ended the week with mixed numbers. Household Spending for January showed a sharp rebound of 6.9% YoY, up from -0.2% in December and above the consensus of 3.3%. However, the BSI Manufacturing Index for Q1 came in at -7.6, down from +7.2 in Q3 and way off the consensus estimate of +8.2. The BoJ is expected to maintain a dovish stance, despite rising inflation. On Friday, a senior BoJ official stated Japan's current and economic price conditions would make it inappropriate to respond with monetary tightening. USD/JPY continues to climb and break above resistance lines. Earlier in the day, the pair broke above resistance at 116.27 and 116.72. The next resistance is at 117.33. There is support at 115.56 and 115.11
by OANDA
2
USD/JPY Primed for Breakout, Ready to Extend Dominant Uptrend?In the wake of the latest US CPI report, where headline inflation clocked in at 7.9% y/y (as expected), continuing to run at 40-year highs, USD/JPY has been trending higher. The Federal Reserve is expected to commence its tightening cycle next week by raising interest rates. Its balance sheet is also no longer expanding. Front-end Treasury yields are on the rise, with the 2-year rate closing at another 2022 high. Favorable monetary policy differentials between the Fed and BoJ may thus continue offering the fundamental fuel for keeping USD/JPY tilted upward. The pair is testing the ceiling of an Ascending Triangle chart formation, where a breakout could hint at uptrend resumption. Such an outcome would expose the December 2016 high at 118.66. Getting there entails clearing the 100% and 123.6% Fibonacci extensions at 117.29 and 118.19 respectively. In the event of a false breakout, keep a close eye on the floor of the chart formation, where rising support could reinstate an upside focus. Breaking under the triangle altogether could spell further losses to come. www.dailyfx.com FX_IDC:USDJPY
by QM_Dubrovsky
Yen rises as Russia launches invasionHopes that diplomatic moves could avert a Russian invasion of Ukraine were shattered early Thursday, as Russia launched a full-scale attack. The move was not all that surprising, given the massive Russian buildup on the border with Ukraine during the past few weeks. Still, the fighting in the heart of Europe has weighed heavily on the financial markets, as risk appetite has fallen sharply. The safe-haven Japanese yen has gained ground and is trading at 3-week highs. Western leaders have strongly condemned the Russian military operation, with NATO's secretary-general calling it 'a brutal act of war'. There will clearly be more sanctions headed Moscow's way, but it's doubtful that this will dissuade Russian President Putin from his aim to force Ukraine back into the Russian orbit. Western Europe is dependent on Russian natural gas and with the US showing no appetite for military intervention, things are looking extremely bleak for pro-Western Ukrainian President Zelensky. On the economic calendar, Japan releases Tokyo Core CPI for February later today. CPI is expected to rise to 0.4%, up from 0.2% in January. Earlier in the week, BoJ Core CPI, the central bank’s preferred inflation gauge, rose 0.8%, lower than the 0.9% gain beforehand. Japan's inflation has been moving higher, although nowhere near the clip we've seen in the US and the UK. Still, with the Russian invasion in Ukraine likely to push energy prices even higher, inflation in Japan should continue on an upswing. Brent crude pushed above USD 100 for the first time since 2014, as the Ukraine conflict threatens to disrupt oil deliveries from Russia, a major producer. The timing couldn't be worse for the central banks of the major economies, which are struggling to contain red-hot inflation. The Fed is still expected to hike rates in March, but it may have to put a pause on additional hikes if economic conditions deteriorate. The 100-DMA at 114.35 is providing support. Close by, there is support at 114.16 115.68 is under pressure as resistance. Above, there is resistance at 116.30
by OANDA
Yen steady ahead of BoJ Core CPIThe Japanese yen has started the week quietly and is trading slightly below the 115 line. The focus will be on Japanese inflation indicators in the coming week, with three events on the economic calendar. Like other major economies, Japan is dealing with a rise in inflation, although the pace has been much more moderate than what we're seeing in the UK or the US. Inflation remains well below the Bank of Japan’s target of 2%, so there is no talk of raising interest rates in the near future. The January reading of BoJ Core CPI, the central bank’s preferred inflation gauge, will be released on Tuesday. The indicator rose 0.9% y/y in December, up from 0.8% and its highest level since May 2016. On Friday, Tokyo Core CPI for February will be released. After a weak reading of 0.2% y/y in December, the indicator is expected to rise to 0.4%.  The crisis brewing in Ukraine remains at a critical stage, as there have been further skirmishes between the Ukraine army and the pro-Russian separatists, with fears that Russia is deliberately creating these flare-ups in order to justify an invasion of Ukraine. Russia has amassed over one hundred thousand troops around the border with Ukraine and could choose to invade at any time. However, there have been some diplomatic moves in the meantime, notably a possible summit between Presidents Biden and  Putin this week. Biden expressed his willingness to meet Putin if there was no invasion. We can expect a ping-pong reaction from the markets in the coming days, with market direction dependent to a large extent on what President Putin does next. 114.61 is under strong pressure in support. Below, there is support at 114.16 There is resistance at 115.68 and 116.30
by OANDA
CADJPY Long IdeaCADJPY has been trading in a downtrend for some time now, however the price has been respecting the key zone of 90.15/90.30. There has been multiple occasions in which the price has fallen to this area and reacted well. Since breaking below this key level on the 24th of January, CADJPY has been setting higher lows and the price has been conforming to an upwards trend line. This morning there was some sell off towards this key area which why our short-term bias is now long considering previous price action. The RSI indicators on the 15m/30m area at oversold conditions which adds to our long bias.
Long
by Orion-Markets
USD/JPY dips ahead of Japanese CPIThe Japanese yen has edged higher for a second straight day. In the North American session, USD/JPY is trading at the 114.00 line. In economic news, Japan releases December inflation data and the BoJ will publish the minutes of its December meeting. In the US, economic releases were mixed. Unemployment claims jumped to 287 thousand, above the forecast of 220 thousand and up from the previous release of 231 thousand. The Philly Fed Manufacturing Index rose to 23.2, up from 15.4 prior and above the consensus of 20.0 points. Inflation in Japan is moving higher, although at a much more modest clip than is the case in the US or UK. Core CPI, which had been hovering close to zero for months, surprised to the upside in November with a 0.5%, up from 0.1% prior. This was its highest level since February 2020. BoJ policymakers aren't losing sleep over surging inflation, but after decades of deflation, rising prices are a novelty for the central bank, as well for businesses and consumers. The BoJ has no plans to shift from its ultra-easy stance, and the bank kept policy intact at this week's policy meeting. Still, it was significant that at the meeting, the bank revised upwards its inflation forecast, which hasn't occurred since 2014.  For the fiscal year starting in April, the BoJ is projecting inflation of 1.1% up from the 0.9% gain it forecast in October. This is noteworthy because the BoJ is acknowledging that inflation could overshoot its projections, something we never saw in the years of deflation. Unlike their counterparts at the Bank of Japan, Fed policymakers are focused on surging inflation and how to contain it. A rate hike is looking increasingly likely in March, but it's unclear just how much of a push the Fed has in mind. We've seen a measured approach of 0.25% hikes for years, but with inflation running at a 40-year high, there is talk of a dramatic 0.50% hike. The Fed is clearly sensitive to market conditions, so odds are that it will avoid a huge 0.50% jump in rates. Still, unusual times may require unusual methods, so it will certainly be interesting to follow the Fed in the weeks ahead. There is resistance at 115.54, followed by 116.88 USDJPY has support at 113.18 and 112.16
by OANDA
3
Yen steady after BoJ meetingThe US dollar has posted small gains, as USD/JPY briefly punched above the 115 line in the Asian session. The yen looked golden last week with gains of 1.15%, but has given up half of those gains so far this week. The Bank of Japan's policy meetings are generally uneventful affairs, with the bank reaffirming its monetary policy. The bank did maintain policy, keeping interest rates at -0.1% and maintaining bond yield targets and asset purchases. But there was a difference at this meeting, with the bank revising upwards its inflation forecast, for the first time since 2014. This is significant because the BoJ is acknowledging that inflation could overshoot its projections, something we never saw in the years of deflation. Inflation in Japan is much lower than in the US or UK, where the central banks have had to tighten policy in order to deal with what has inflation, which has become Enemy Number One. The global wave of inflation, which has seen energy and raw material costs soar, has also reached Japan, and the increase in inflation has forced the BoJ to pay attention to the new phenomenon of rising inflation. For the fiscal year starting in April, the BoJ is projecting inflation of 1.1% up from the 0.9% gain it forecast in October. Last week, Reuters reported that the BoJ is considering the eventuality of having to raise interest rates even if inflation does not reach the bank's two percent target. The BoJ's ultra-accommodative policy won't be changed anytime soon and inflation still remains below 2%. Still, it is noteworthy that for the first time in years the BoJ is addressing inflation concerns, and that could eventually lead to a shift in policy. There is resistance at 115.54, followed by 116.88 There is support at 113.18 and 112.16
by OANDA
Japanese yen dips, BoJ meeting nextThe US dollar has edged higher at the start of the week. In the European session, USD/JPY is trading at 114.56, up 0.36% on the day. The yen is coming off its best week since November 2020, with USD/JPY falling by 1.15% last week. US Treasury yields have taken the yen on a roller-coaster ride. Earlier this month, USD/JPY punched above the 1.16 line, as 10-year US Treasury yields were on a roll and climbed above 1.70%. The yield rally ran out of steam last week, allowing the yen to recover. The yen is very sensitive to the US/Japan rate differential, which has been the driver behind the yen's volatility. The 10-year yield is currently at 1.79%, a whisker below the 52-week high of 1.80%. If the 10-year yield resumes its upswing, I would expect USD/JPY to follow suit. The Bank of Japan holds a policy meeting on Tuesday. The bank is expected to maintain its ultra-easy policy, which sounds like business as usual for the BoJ. However, in what could be a significant development, the bank is expected to revise upwards its inflation view for the first time since 2014. Inflation is much lower than the surging levels we are seeing in the US and UK, but the upswing in inflation is significant, given that Japan has grappled with deflation for years. The BoJ has been quietly tapering its bond purchases, and the bank could eventually raise interest rates even if the bank's inflation target of 2% is not met. The BoJ does not have any plans to raise interest rates, but if inflation continues to rise, bank policymakers will have to begin considering raising rates, which until recently would have been considered almost outlandish. There is resistance at 115.54 followed by 116.88 There is support at 113.18 and 112.16
by OANDA
Buckle up!Dear reader How nice to see you again. I have been busy with public and private clients since 2020, and although I continue to take a keen interest in markets and etc, I no longer have much time other than the (very) occasional consultancy for detailed writings. I am looking for a solution as even the weekends cannot tempt me back into regular updates! There are a couple of trades though that I hear interesting things about - whether they will be suitable for your portfolios, I do not know, but they may be worth considering: Stay Long USDJPY looking for 150, and Short Gold for 1510. Full disclosure I am in full positions in both, Long USDJPY we have covered in great detail already, as with Gold . My in-depth knowledge of the commodity sector is decreasing now as I am further away from it, but from what I hear, these two are capable both medium and long term. I hope this information might be useful to you. I would be grateful for anonymity as a source. Wish you all the best for Q1. Thanks again!
Long
by ridethepig
5
Yen edges below 116, inflation nextThe Japanese yen has edged higher and is back below the 116 level. Still, the yen remains vulnerable, especially with US treasury yields moving higher. Earlier in the week, USD/JPY broke above116 line for the first time since January 2017. The dollar has managed to push the yen to 5-year lows on the back of rising US Treasury yields. The 10-year yield, which finished 2021 above the 1.50% level, hasn’t missed a beat in the first week of 2022 and has pushed above 1.70%. The widening US/Japan rate differential has been weighing on the yen, which is extremely sensitive to the rate differential. If US yields remain high, I would not be surprised to see USD/JPY break past the 118 mark over the coming weeks. Inflation has become a hot topic for the Federal Reserve and the BoE, as policymakers must deal with inflation levels that are double or triple the banks’ inflation target of 2%. In Japan, inflation has been at low levels for years, with deflation a constant problem. However, Japan hasn’t been immune to surging energy costs and rising prices of raw materials, and inflation is now getting some attention from the Bank of Japan. We’ll get a look at Tokyo Core CPI for December later in the day, which is expected to rise to 0.5% y/y, up from 0.3% in November. With the FOMC minutes behind us, the markets are anxiously awaiting Friday’s nonfarm payroll report. The ADP employment report surprised to the upside, with a massive 807 thousand new jobs, double the consensus of 400 thousand. The huge gain led Goldman Sachs to upwardly revise its forecast by 50 thousand to 500 thousand and some analysts are projecting a print north of the 1-million mark. Still, it should be remembered that the ADP report has not been a reliable indicator for nonfarm payrolls. The consensus for the NFP stands at 424 thousand, and if the reading comes in below expectations, we could see the US dollar falter as a weak NFP could delay the timeframe for the first rate hike of 2022. USD/JPY is putting pressure on resistance at 115.78. Above, there is resistance at 116.38 There is support at 114.54 and 113.98
by OANDA
$EURJPY: Daily uptrend once again...Seems like yields have bottomed in the US, we got a shot at a reflationary/reopening move thanks to the recent wave of news surrounding Omicron and the $PFE/$MRK pills, together with a nice sentiment reset for the past month across the board. I'd suggest going long XXXJPY here, I'm in $GBPJPY and $EURJPY personally, but $AUDJPY also has a nice signal as well and historically correlates equities, in particular in periods like what could unfold next. Best of luck, Ivan Labrie.
Long
by IvanLabrie
1
Yen dips despite stronger JPY retail salesThe Japanese yen continues to lose ground. The yen suffered a third straight losing week, and the trend has continued on Monday. With USD/JPY currently trading around the 114.70 level, the 115 line is vulnerable. The pair last breached this symbolic level a month ago, but the dollar couldn't consolidate above this level. Japan's retail sales overperforms Christmas week started off on a positive note, as Japan Retail Sales for November posted a strong gain of 1.9% y/y, ahead of the consensus of 1.7% and above the 0.9% gain in October. Consumers were out in force as Covid-19 cases fell during November. Still, the Omicron variant has started to spread in Japan's major cities, leading to fears that the government could impose health restrictions or that consumers will stay at home to avoid contracting Omicron. Japan is set on spending its way to a stronger economy, and parliament approved a record 10.8 trillion yen budget on Friday, which includes payouts to households and businesses hit by Covid. Japan's economy is expected to roar back in Q4, with a consensus of 6.4% growth, after a contraction of -3.6% in the third quarter. Inflation is on the rise in Japan. In November, Core CPI rose 0.5% y/y, above the consensus of 0.4%. That might seem insignificant compared with inflation numbers in the UK and the United States, but given that inflation has been negligible for years in Japan, this is certainly a change in direction. The uptick in inflation will be welcome news at the Bank of Japan, and should ease policymakers' concerns about deflation. The bank's inflation target of 2% remains a long way off, but inflation could move higher if the Omicron does not derail economic activity. USD/JPY is putting pressure on resistance at 114.82. Above, there is resistance at 115.26 There is support at 113.65 and 112.90
by OANDA
Yen edges lower, GDP revised upwardsThe markets were treated to some positive news out of Japan, which raised its growth projections for the upcoming fiscal year, which starts in April 2022. The government is projecting growth of 3.2%, up sharply from the July estimate of 2.2%. The upward revision comes on the heels of the supplementary budget which was approved in parliament earlier this week. On Friday, the government plans to pass the annual budget of 107.6 trillion yen. Japan's debt is already the highest among developed countries, and this budget will strain the public debt even further. Policymakers are determined to boost sagging economic growth through spending and continuing an ultra-easy monetary policy. The economy contracted by 3.6% y/y in the third quarter, after a resurgence of Covid cases. Japanese companies, like their counterparts in the US and the UK, have been hit with higher costs, as energy and raw material prices have surged. However, unlike their counterparts abroad, Japanese firms remain reluctant to pass on rising costs to consumers, which has kept consumer inflationary prices in check. The discrepancy in wholesale and consumer prices was massive in October - Core CPI rose a negligible 0.1% y/y, while wholesale prices soared 8.0% y/y, the sharpest rise since in over 40 years. Even with the jump in wholesale prices, the BoJ's inflation target of 2% remains far off and this is unlikely to change in the near future. The BoJ has stubbornly clung to an inflation target of 2%, unfazed that this target has little chance of being realized anytime soon. As long as inflation remains below the target, the central bank can be expected to continue its ultra-accommodative policy. USD/JPY is again testing resistance at 114.27. The next resistance line is 114.82 There is support at 113.16 and 112.60
by OANDA
GBP/JPY - Big Test Above We've seen a bit of a recovery in GBPJPY over the last couple of weeks as risk appetite has rebounded in the markets. But how much further can it run? What's helped the move more recently is improving odds on a BoE rate hike on Thursday. It's still widely expected that the MPC will vote against hiking this time and then do so in February when they have a much clearer view on omicron and the economy, but it's now expected to be much closer. A hike could propel the pound higher in the near term and put key resistance under significant pressure. The big test above is 152.50, where the 61.8 fib coincides with recent support, the upper end of the 200/233-day SMA, and the lower end of the 55/89-day SMA. A rotation off here could be a very bearish signal as it would confirm the initial break into bearish territory and suggest the recent correction is just that rather than something more significant. It wouldn't be the first time that the BoE has put off raising rates, despite leading us to believe otherwise. I don't think that would be the case this time though. Rather, they could hike in order to follow through on those warnings and once again catch the market a little off-guard. Either way, with the BoE and BoJ rate decisions to come, among many others, the next couple of days will be action-packed which could bring plenty of volatility.
by OANDA
#JPYUSD Long term view shows weaker US$ and re-test of 110Hi All, my main 3 take-outs from this analysis are the following: 1- In the weekly chart - so long term view - the US$ is possibly going to re-test the 110 area (at least!). In fact, in that area we have a strong uptrend line (in red) which will possibly act as support 2- The cross came out from a descending channel which lasted since the end of 2016, and this breakout happened in March this year 3- Fibonacci tool suggests that the cross might not only re-test the 110 level (38.2 fibo level) but also test the 109 and the 107 (50% and 61,8%) Not a financial advice, just personal opinion. Do your own due diligence and good luck!
Short
by FrancescoMerlettini
Japanese yen higher despite weak CPIThe Japanese yen has edged higher on Friday. USD/JPY is trading at 113.93, down 0.28% on the day. Japan's CPI edged up by 0.1% y/y in October, identical to the September gain. Higher energy costs were behind the increase, which would have been higher if not for a sharp drop in mobile phone fees. These inflation figures are certainly much more subdued than what we're seeing in the US and the UK, where inflation has become a hot issue and is affecting monetary policy. Still, rising fuel prices is a major concern for consumers and businesses, and the government's new economic package is expected to provide some relief. Many businesses have been hit hard by cost pressures, due to the weak yen, supply chain disruptions and high commodity prices. This hasn't translated into high inflation, as most firms are reluctant to pass on these costs to consumers. The Japanese yen remains under pressure and is on target for the dubious honour of being the worst-performing G-10 currency in 2021. The increased likelihood of higher US rates and the surge in oil prices have contributed to the weak yen, which climbed close to the 115 level this week. The yen is extremely sensitive to the USD/JPY rate differential, and a rise in US rates could push the yen above the 120 level. With inflation soaring in the US and the UK, the Fed and BoE are under pressure to tighten policy. There are growing calls for the Fed to accelerate its tapering and the BoE may raise rates next month. It's a completely different story in Japan, where inflation remains subdued. On Friday, the government unveiled a USD 490 billion stimulus plan, the largest ever in the country's history. The government is hoping that the plan will kick-start the lethargic Japanese economy. There is resistance at 115.02 and 116.15 USD/JPY is testing support at 114.58. This is followed by support at 113.01
by OANDA
Dominant currency sentimentHello Traders! BOE rate outlook continues to improves following uk CPI Heading into todays European trading session, the risk tone is mixed. Asia - Pacific indices are weaker, measures of volatility mixed and safe heavens pressured. Leading Asia-Pacific indices to the downside is the ASX 200 at -0,68% followed by the Topix at -0,61%, the Hang Seng at -0,49 and the Nikkei 225 at -0,40 %. The CSI is positive on the session at + 0,05%. In the FX complex, despite the weakness in equities, It's CHF leading to the downside, with JPY also pressured across the board. USD remains the exception, with the currency remaining supported by FED rate hike expectations. Looking ahead, inflation is likely to remain a theme throughout the day, with EU CPI due to be released in todays European session and Canadian CPI due to be released later today. Have a great day! Regards, Vitez
by Vitezabraham
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