Japanese Yen: USD/JPY (JPY=X) – Fear of Global Recession Makes Dollar Highly Desired Liquid Asset
The Dollar/Yen firmed last week as investors took shelter in the U.S. currency amid worsening economic fallout from the coronavirus pandemic. Investors largely shrugged off the U.S. Non-Farm Payrolls report that showed massive job losses of 701,000 last month, compared with expectations of 100,000 lost jobs.
March’s contraction abruptly ended a historic 113 straight months of employment growth. The Labor Department also revised February’s number upward to 275,000 job gains. The unemployment rate rose to 4.4% from 3.5% the previous month.
“The plunge in non-farm payrolls in March, which is already close to the worst monthly declines during the global financial crisis, suggests the coronavirus pandemic started to decimate the economy even sooner than we thought,” said Andrew Hunter, senior U.S. economist at Capital Economics.
The non-farm payrolls report followed Thursday’s data showing initial claims for U.S. unemployment benefits rose to 6.65 million in the latest week from an unrevised 3.3 million the previous week. The figures far exceeded the median estimate of 3.50 million in a Reuters survey of economists.
Japanese Economic Data
The Japanese government and the Bank of Japan had to be happy with the drop in the Japanese Yen, but more importantly the better-than-expected economic data.
Last week, the USD/JPY settled at 108.468, up 0.491 or +0.45%.
Preliminary Industrial Production came in at 0.4%, beating the 0.0% estimate. The previous month was also revised higher to 1.0%.
Retail Sales were a big surprise, jumping by 1.7%. This was much better than the -1.5% forecast and -0.4% previous read.
The Tankan Manufacturing Index came in lower at -8, but this was better than the -10 forecast. The Tankan Non-Manufacturing Index was 8, also higher than the estimated 3.
Finally, the Final Manufacturing PMI was 44.8, matching the forecast.
Overall, the bias in prices is: Sideways.
The projected upper bound is: 112.29.
The projected lower bound is: 105.39.
The projected closing price is: 108.84.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 24 white candles and 24 black candles.
Three white candles occurred in the last three days. Although these candles were not big enough to create three white soldiers, the steady upward pattern is bullish.
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 66.1786. This is not an overbought or oversold reading. The last signal was a buy 1 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 51.81. 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 19 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 -18. This is not a topping or bottoming area. The last signal was a sell 7 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 4 period(s) ago.
Rex Takasugi – TD Profile
FOREX JPY= closed up 0.390 at 108.840. Volume was 77% below average (consolidating) and Bollinger Bands were 101% wider than normal.
Open High Low Close Volume___
108.420 109.080 108.330 108.840 23,343
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 108.75 108.75 108.32
Volatility: 14 21 12
Volume: 151,536 126,602 95,872
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 0.5% above its 200-period moving average and is in an downward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. Our volume indicators reflect moderate flows of volume into JPY= (mildly bullish). Our trend forecasting oscillators are currently bearish on JPY= and have had this outlook for the last 2 periods.