Investors Flock To Safe-Haven Japanese Yen: USD/JPY (JPY=X) Amidst Coronavirus Panic
The Japanese Yen exchange rates trended higher against the majority of its peers over the last week as the currencies perceived safe-haven status created significant demand from investors spooked by the coronavirus outbreak in China.
Markets grew increasingly unsettled by coronavirus developments this week as the number of cases worldwide officially exceeded that of the Sars epidemic of 2003 and was official declared a global health emergency by the World Health Organisation (WHO).
“The acceleration in the spread of the virus across the globe along with the increase in the number of deaths, continues to alarm financial markets” says Chris Towner, director at risk management firm JCRA.
Markets fear the outbreak and the Chinese government’s attempts to contain it by shutting down public transport and quarantining millions of residents is likely to adversely impact China’s economy in the first quarter of 2020, even possibly leading to a contraction in growth.
As a major engine of global growth its feared a slowdown in China could undo the recent recovery in the global economy.
Sars was estimated to have cost the global economy approximately $30bn, but with China’s greater importance global trade its feared that the Coronavirus outbreak could be even more damaging.
US Federal Reserve President Jerome Powell warned of the impact of the US and other economies.
“China’s economy is very important in the global economy now, and when China’s economy slows down we do feel that – not as much though as countries that are near China, or that trade more actively with China, like some of the Western European countries.”
Experts suggest it could be another week before the virus peaks, further fueling fears that China’s manufacturing sector could be facing a prolonged shutdown.
Coronavirus Fears to Keep the Yen in Demand?
Looking ahead to next week’s session, we expected the Japanese Yen (JPY) exchange rates to remain well supported so long as concerns over the coronavirus outbreak continue to bolster demand for safe-haven assets.
Also in focus for JPY investors next week will be the publication of Japan’s latest earnings figures, where a potential rebound in wage growth in December may further buoy the appeal of the Yen.
Overall, the bias in prices is: Sideways.
The projected upper bound is: 109.30.
The projected lower bound is: 107.59.
The projected closing price is: 108.44.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 2 white candles and 8 black candles for a net of 6 black candles. During the past 50 bars, there have been 24 white candles and 26 black candles for a net of 2 black candles.
A bullish harami occurred (where the current small white body is contained within an unusually large black body). During a downtrend (which appears to be the case with FOREX JPY=) this pattern implies an end to the decline as the bears appear to have exhausted themselves.
During an uptrend the bullish harami pattern is bearish as the bears appear to be gaining strength as the bulls weaken.
A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.
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.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 20.3328. This is not an overbought or oversold reading. The last signal was a buy 3 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 36.90. 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 124 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 -126.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 11 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 6 period(s) ago.
Rex Takasugi – TD Profile
FOREX JPY= closed up 0.070 at 108.450. Volume was 98% below average (consolidating) and Bollinger Bands were 26% wider than normal.
Open High Low Close Volume___
108.400 108.470 108.370 108.450 1,500
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 109.12 109.19 108.41
Volatility: 4 5 7
Volume: 73,897 74,593 86,218
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.
FOREX JPY= is currently 0.0% above its 200-period moving average and is in an downward trend. Volatility is relatively normal 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 bearish on JPY= and have had this outlook for the last 3 periods.
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