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USD JPY - FUNDAMENTAL ANALYSISYen Undervalued, Yuan to Lose Ground Danske Bank continues to expect that the Bank of Japan will tighten monetary policy this year, although the timing remains very uncertain. While a key argument against the Euro is that the currency is overvalued, it considers that the Japanese currency is substantially undervalued. According to Danske; “Overall, USD/JPY seems fundamentally overvalued and combined with potential monetary policy tightening; we expect the cross to drop below 130 on a 6-12M horizon. If inflationary pressures in Japan continue to persist, it will increasingly build pressure on the ultra-dovish stance that the BoJ has. Danske expects the Chinese yuan will lose ground due to broad dollar gains. A weaker Chinese currency would also act as a barrier to Euro gains.
Short
by thunderpips
Joe G2H Trade: Selling GBPJPYTrade Idea: Selling GBPJPY Reasoning: Selling into short term downtrend resistance Entry Level: 170.22 Take Profit Level: 168.02 Stop Loss: 170.74 Risk/Reward: 4.2/1 Disclaimer – Signal Centre. Please be reminded – you alone are responsible for your trading – both gains and losses. There is a very high degree of risk involved in trading. The technical analysis , like all indicators, strategies, columns, articles and other features accessible on/though this site is for informational purposes only and should not be construed as investment advice by you. Your use of the technical analysis , as would also your use of all mentioned indicators, strategies, columns, articles and all other features, is entirely at your own risk and it is your sole responsibility to evaluate the accuracy, completeness and usefulness (including suitability) of the information. You should assess the risk of any trade with your financial adviser and make your own independent decision(s) regarding any tradable products which may be the subject matter of the technical analysis or any of the said indicators, strategies, columns, articles and all other features.
Short
by Signal_Centre
1
USD JPY - FUNDAMENTAL ANALYSISJapan: High expectations for Q1 GDP, with persistent inflation concerns Japan’s preliminary GDP for Q1 is due on Wednesday and will provide the latest insight into the health of the economy. Bloomberg consensus expects an improvement to 0.8% Q/Q annualized from 0.1% in Q4 when the economy narrowly avoided a recession. While a broader reopening of the economy in the first quarter and the return of some Chinese tourists may have meant a further uptick in the services sector, exports and manufacturing likely remained weak on the back of weakness in global demand. If domestic consumption weakens substantially despite the government travel subsidies and high winter bonuses, it could continue to highlight the risk of a recession. April CPI will also be released on Friday which will likely confirm that price pressures remain concerning. Tokyo CPI for April had come in above expectations despite the falling commodity prices and the base effect. Bloomberg consensus expects national CPI for April to come in at 3.5% for the headline from 3.2% previously while the core-core measure (ex-fresh food and energy) is expected to rise to 4.2% from 3.8% in March.
Short
by thunderpips
GBP JPY - FUNDAMENTAL ANALYSISJapan: High expectations for Q1 GDP, with persistent inflation concerns Japan’s preliminary GDP for Q1 is due on Wednesday and will provide the latest insight into the health of the economy. Bloomberg consensus expects an improvement to 0.8% Q/Q annualized from 0.1% in Q4 when the economy narrowly avoided a recession. While a broader reopening of the economy in the first quarter and the return of some Chinese tourists may have meant a further uptick in the services sector, exports and manufacturing likely remained weak on the back of weakness in global demand. If domestic consumption weakens substantially despite the government travel subsidies and high winter bonuses, it could continue to highlight the risk of a recession. April CPI will also be released on Friday which will likely confirm that price pressures remain concerning. Tokyo CPI for April had come in above expectations despite the falling commodity prices and the base effect. Bloomberg consensus expects national CPI for April to come in at 3.5% for the headline from 3.2% previously while the core-core measure (ex-fresh food and energy) is expected to rise to 4.2% from 3.8% in March.
Short
by thunderpips
USD JPY - FUNDAMENTAL ANALYSISJapan: High expectations for Q1 GDP, with persistent inflation concerns Japan’s preliminary GDP for Q1 is due on Wednesday and will provide the latest insight into the health of the economy. Bloomberg consensus expects an improvement to 0.8% Q/Q annualized from 0.1% in Q4 when the economy narrowly avoided a recession. While a broader reopening of the economy in the first quarter and the return of some Chinese tourists may have meant a further uptick in the services sector, exports and manufacturing likely remained weak on the back of weakness in global demand. If domestic consumption weakens substantially despite the government travel subsidies and high winter bonuses, it could continue to highlight the risk of a recession. April CPI will also be released on Friday which will likely confirm that price pressures remain concerning. Tokyo CPI for April had come in above expectations despite the falling commodity prices and the base effect. Bloomberg consensus expects national CPI for April to come in at 3.5% for the headline from 3.2% previously while the core-core measure (ex-fresh food and energy) is expected to rise to 4.2% from 3.8% in March.
Short
by thunderpips
GBP JPY - FUNDAMENTAL ANALYSISJapanese yen strength over time. While the yen underperformed during the global monetary tightening phase, in our view, the currency has scope to outperform later this year. We now believe the BoJ will take advantage of a tactical opportunity to further tweak its policy settings in Q4-2023 to further normalize the government bond market. Such a policy move adds to our constructive medium-term outlook for the yen. Yen outperformance over time should also be supported by the end of central bank tightening and a transition toward easing, as well as a U.S. recession in the second half of 2023.
Short
by thunderpips
2
USD JPY - FUNDAMENTAL ANALYSISJapanese yen strength over time. While the yen underperformed during the global monetary tightening phase, in our view, the currency has scope to outperform later this year. We now believe the BoJ will take advantage of a tactical opportunity to further tweak its policy settings in Q4-2023 to further normalize the government bond market. Such a policy move adds to our constructive medium-term outlook for the yen. Yen outperformance over time should also be supported by the end of central bank tightening and a transition toward easing, as well as a U.S. recession in the second half of 2023.
Short
by thunderpips
USD JPY - FUNDAMENTAL ANALYSISJapanese yen strength over time. While the yen underperformed during the global monetary tightening phase, in our view, the currency has scope to outperform later this year. We now believe the BoJ will take advantage of a tactical opportunity to further tweak its policy settings in Q4-2023 to further normalize the government bond market. Such a policy move adds to our constructive medium-term outlook for the yen. Yen outperformance over time should also be supported by the end of central bank tightening and a transition toward easing, as well as a U.S. recession in the second half of 2023.
Short
by thunderpips
GBP JPY - FUNDAMENTAL ANALYSISMonetary Policy: A Hawkish Stance? The BoE's impending monetary policy decision is a critical factor underpinning Sterling's performance. The analysts' consensus is that the BoE will adopt a hawkish stance, with a 25 basis point hike in the bank rate. This move would bring the bank rate to 4.50%, in line with market expectations. "We expect the BoE to hike the Bank Rate by 25bp bringing it to 4.50%, which is fully priced by markets," says Kirstine Kundby-Nielsen, Analyst, FX Strategy at Danskebank. She adds, "In our base case of a 25bp hike, we expect the reaction in EUR/GBP to be rather muted on the release but move slightly higher during the press conference." Similarly, Valentin Marinov, Head of G10 FX Strategy at Credit Agricole, also foresees a rate hike. However, he points out that the Monetary Policy Committee (MPC) may remain divided over the need for further aggressive hikes. "We expect that the MPC will deliver a 25bp rate hike today to lift the bank rate to 4.50% but think it will remain divided on the need for further aggressive hikes," says Marinov. Rate Hike Cycle: Nearing its Peak? Another hotly debated topic among analysts is the trajectory of the BoE's rate hike cycle. While some believe that the current cycle is nearing its peak, others argue for its continuation, contingent on the data. ING Economics' FX Strategist, Francesco Pesole, suggests that the BoE might be close to hitting the peak in its rate hike cycle. He cites the primary drivers of inflation, namely food prices and core goods inflation, as temporary phenomena and expects a rapid deceleration in CPI later this year. "Today’s 25bp hike may well be the last one in this cycle," says Pesole. "The drivers of higher-than-projected inflation have primarily been food prices and some surprising stickiness in core goods inflation: neither of those trends look likely to be long-lasting," he adds. On the other hand, Danskebank's Kundby-Nielsen anticipates that the BoE will communicate a 'pause' in its hiking cycle to fully assess the impact of previous rate increases. However, she highlights that this decision will be heavily data-dependent. "In its statement we expect the BoE to prime markets for a pause in the hiking cycle as the central bank wants to fully evaluate the effect from previous Bank Rate increases before deciding on next steps," says Kundby-Nielsen. "However, as always, all future decisions will be data-dependent," she adds. Outlook for the Pound Sterling: Where Next? The impending BoE decision is also expected to have significant ramifications for the sterling. While the overall outlook appears cautiously optimistic, the currency's fate is contingent on multiple factors, including the BoE's future monetary policy stance and the pace of economic recovery. MUFG's Senior Currency Analyst, Lee Hardman, observes the sterling trading close to its year-to-date highs ahead of the BoE meeting. The strengthening of the sterling, particularly against the euro, reflects the fading investor pessimism about the UK's economic outlook. Hardman also notes the resilience of the UK economy and the persistent inflation and wage growth, which puts pressure on the BoE to maintain its rate hike cycle. "The pound is continuing to trade close to year-to-date highs ahead of today’s BoE policy meeting," says Hardman. "The resilience of the UK economy at the start of this year alongside still uncomfortably strong inflation and wage growth keeps pressure on the BoE to keep raising rates," he adds. Francesco Pesole of ING Economics also discusses the sterling's recent strength, attributing it in part to aggressive market expectations of BoE tightening. However, he believes that these hawkish expectations may be excessive and could be scaled back. "We acknowledge that part of GBP’s recent strength has been due to the market’s aggressive expectations about BoE tightening, and therefore recognise there are downside risks as those (excessive, in our view) hawkish expectations are scaled back," says Pesole. BoE's Forward Guidance and Sterling's Reaction Much of the sterling's reaction post-BoE decision would depend on the central bank's forward guidance. Tullia Bucco, Economist at UniCredit Bank, anticipates that the BoE will likely maintain a data-dependent approach without offering explicit rate guidance, leaving the sterling's performance hanging in the balance. "A 25bp rate hike to 4.50% is expected, and sterling’s reaction will therefore likely mostly depend on the message that BoE Governor Bailey conveys in his press conference," says Bucco. "The risk is that no rate guidance will be delivered today, with the BoE stressing that further rate decisions remain data dependent, which might not offer sterling much support either," she adds. Nikesh Sawjani, Economist at Lloyds Bank, highlights that the 25bps rise would make it the twelfth consecutive hike in the current cycle which began in December 2021. The cumulative tightening since then would total 440bp. Sawjani draws attention to the fact that current CPI inflation is much stronger than the BoE had anticipated, with March's headline CPI at a substantial 10.1%, notably above the BoE staff forecast of 9.2%. Sawjani also anticipates an upward revision of GDP forecasts, backed by possible GDP growth in Q1 and survey evidence of improved economic confidence and activity at the start of Q2. Additionally, he expects that fiscal measures from the March Budget and lower-than-assumed energy prices will likely support real incomes, further bolstering GDP. "New BoE economic forecasts will provide an update on the medium-term growth and inflation outlook," says Sawjani. "Overall, it seems likely that GDP forecasts will be revised higher. All else being equal, that would lead to a higher medium-term inflation profile although not sufficiently to prevent an undershoot of the 2% target in 2024 and 2025," he adds.
Short
by thunderpips
USD JPY - FUNDAMENTAL ANALYSISJapanese yen strength over time. While the yen underperformed during the global monetary tightening phase, in our view, the currency has scope to outperform later this year. We now believe the BoJ will take advantage of a tactical opportunity to further tweak its policy settings in Q4-2023 to further normalize the government bond market. Such a policy move adds to our constructive medium-term outlook for the yen. Yen outperformance over time should also be supported by the end of central bank tightening and a transition toward easing, as well as a U.S. recession in the second half of 2023.
Short
by thunderpips
1
GJI've been quiet in that I haven't posted in a while but I have been monitoring the charts. So now I would like to firstly apologise to myself for not committing and doubting the work needed to be done. Secondly, I would like to apologise to anyone that does follow me and gets any value from what I do. This is my current vision of what I see and where I believe GJ is going. We are in the correction phase of a channel, so I will wait for a break (Violent one) downwards, a retest, candle confirmation and then enter and ride it the whole way down. I am challenging myself to post everyday even if it is just comments and not a forecast.
Short
by Mhangwane1
5