Japanese Yen: USD/JPY (JPY=X) Appetite for Risk Declines

Japanese Yen: USD/JPY (JPY=X) Appetite for Risk Declines

Japanese Yen: USD/JPY (JPY=X) Appetite for Risk Declines

The Dollar/Yen is down sharply on Thursday after China’s Hubei province, the epicenter of a coronavirus outbreak, reported a sharp jump in the number of new cases in a surprise to investors, sparking a flight into the safe-haven Japanese Yen.

Hubei on Thursday reported 14,840 new cases as of February 12, up from 1,638 new cases on Tuesday, with the number of deaths in the province rising a sharp 242 to 1,310.

Hubei’s health commission said it started including cases diagnosed with a new method. Uncertainty about the virus, which emerged in Hubei’s capital Wuhan late last year and has spread to 24 other countries, has shaken up the financial markets over the past weeks.

US Economic News

Federal Reserve Chairman Jerome Powell wrapped up his semi-annual testimony before the Senate Banking Committee on Wednesday, noting the central bank should have an idea of the coronavirus’ impact on the U.S. economy ‘fairly soon.” Powell also said the Fed would use forward guidance and asset purchases to fight an economic downturn, but also suggested the central bank was running out of ammo.

On Tuesday, Chief Powell testified in front of the House Financial Services Committee that the American economy is in a good place, but that the central bank is “closely monitoring” the potential global economic fallout from the virus.

Daily Forecast

The main focus for USD/JPY traders on Thursday will be the direction of the global equity markets and the safe-haven Treasurys. A “risk-off” scenario and a drop in U.S. interest rates will drive investors into the safe-haven Japanese Yen.

On the data front, traders will get the opportunity to react to the latest data on U.S. consumer inflation. CPI is expected to come in at 0.2%. Core CPI is expected to rise 0.2%. These numbers will not be enough to change Fed policy.

Weekly Unemployment Claims are expected to come in at 210K, up from last week’s 202K reading.

Technical Indicators

Overall, the bias in prices is: Sideways.

By the way, prices are vulnerable to a correction towards 109.20.

The projected upper bound is: 110.73.

The projected lower bound is: 108.95.

The projected closing price is: 109.84.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 6 white candles and 3 black candles for a net of 3 white candles. During the past 50 bars, there have been 25 white candles and 24 black candles for a net of 1 white candles.

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 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 62.2225. This is not an overbought or oversold reading. The last signal was a sell 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 55.38. 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 133 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 59. This is not a topping or bottoming area. The last signal was a sell 1 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 6 period(s) ago.

Rex Takasugi – TD Profile

FOREX JPY= closed up 0.010 at 109.820. Volume was 97% below average (consolidating) and Bollinger Bands were 6% wider than normal.

Open     High      Low     Close     Volume___
109.800 109.830 109.780 109.820 2,242
Technical Outlook 
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 109.69 109.33 108.37
Volatility: 5 5 7
Volume: 80,440 75,537 86,590

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 1.3% above its 200-period moving average and is in an upward trend. Volatility is high 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 5 periods.

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