Bank of Japan maintains monetary policy tools unchanged, Japanese Yen: USD/JPY (JPY=X) gains

Bank of Japan maintains monetary policy tools unchanged, Japanese Yen: USD/JPY (JPY=X) gains

Bank of Japan maintains monetary policy tools unchanged, Japanese Yen: USD/JPY (JPY=X) gains

The Japanese Yen saw cautious gains even though the Bank of Japan left key monetary policy setting tools unchanged in July. The policy balance rate and 10-year government bond yield target held at -0.10% and 0.00% respectively. Meanwhile, the central bank maintained its 80 trillion Yen target for annual JGB purchases.

There were a couple of downgrades in their economic forecasts which might have resulted in JPY strength given that there was no shift in their forward guidance. The central bank lowered fiscal 2019 core CPI to 1.0% from 1.1% prior. Their calculations for inflation accounted for the anticipated impact of a sales tax hike later this year. For the same period, real GDP estimates were also downgraded from 0.8% to 0.7%.

While the Japanese Yen may be quiet for the time being, more volatility could be in store for the currency given the action-packed week ahead. The anti-risk JPY could see buying pressure on key events such as the Federal Reserve rate decision on Wednesday where the central bank is anticipated to cut rates for the first time since 2008. The Yen may also gain on US-China trade talks should investors unwind exposure from risky equities into safer Treasuries.

Regarding the former, there appears to be a decreasing propensity for the central bank to surprise more dovish before triggering a panic selloff in equities which may boost JPY. They have mentioned spillover concerns from a fragile global growth outlook. There is also the risk that those anticipating a 50 basis point rate cut will be disappointed, with Fed funds futures placing those odds at about 20 percent.

Overall, the bias in prices is: Sideways.

The projected upper bound is: 109.68.

The projected lower bound is: 107.47.

The projected closing price is: 108.57.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 24 white candles and 24 black candles.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 81.1146. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a buy 9 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 54.95. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 24 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 119.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a buy 6 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 4 period(s) ago.

Rex Takasugi – TD Profile

FOREX JPY= closed down -0.160 at 108.610. Volume was 14% below average (neutral) and Bollinger Bands were 26% narrower than normal.

Open     High      Low     Close     Volume___
108.770 108.940 108.440 108.610 75,056
Technical Outlook 
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 108.18 108.35 110.50
Volatility: 6 6 7
Volume: 77,818 87,075 96,242

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

FOREX JPY= is currently 1.7% below its 200-period moving average and is in an upward trend. Volatility is low as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of JPY= at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on JPY= and have had this outlook for the last 16 periods.

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