Japanese Yen: USD/JPY (JPY=X) Fed Minutes Will Be Eyed Closely

Japanese Yen: USD/JPY (JPY=X) Fed Minutes Will Be Eyed Closely

Japanese Yen: USD/JPY (JPY=X) Fed Minutes Will Be Eyed Closely

There are no major reports from Japan this week so the data from the U.S. will dictate the direction of the USD/JPY. Basically, lower Treasury yields and weaker stock prices will be bearish for the Forex pair. A drop in yields and trader demand for risky assets will be supportive.

The Dollar/Yen closed lower last week after a string of disappointing U.S. economic reports raised concerns the global economic slowdown had reached the United States. The initial selling pressure was fueled by worries that a slowdown in manufacturing will spread to other parts of the U.S. economic machine.

Most of the selling was fed by safe-haven buying as investors aggressively shed the higher risk U.S. stock market for the safety of the U.S. Treasury bond market. This drove down Treasury yields, making the U.S. Dollar a less-attractive investment.

The two key reports that encouraged investors to sell the USD/JPY were the ISM Manufacturing PMI report that showed manufacturing activity contracted in September for the second month in a row, and the ISM Non-Manufacturing PMI, which also declined but remained in expansion territory. Helping to encourage investors to lighten up on the short side was the September Non-Farm Payrolls report, which provided some assurance that despite a slowdown in hiring, the labor market remains tight, which is a positive for consumers and the economy.

There were no major reports out of Japan last week as investors continued to dwell on the possibility of a rate cut by the Bank of Japan at its policy meeting on October 31.

The minor reports were mixed. On the positive side, retail sales, the unemployment rate, the Tankan Manufacturing Index and the Tankan Non-Manufacturing Index came in better-than-expected. On the negative side, preliminary industrial production, housing starts, final manufacturing PMI and consumer confidence, disappointed.

Technical Indicators

Overall, the bias in prices is: Sideways.

The projected upper bound is: 108.35.

The projected lower bound is: 105.44.

The projected closing price is: 106.90.

Candlesticks

A white body occurred (because prices closed higher 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 26 white candles and 24 black candles for a net of 2 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.

Technical Indicators

Overall, the bias in prices is: Sideways.

The projected upper bound is: 108.35.

The projected lower bound is: 105.44.

The projected closing price is: 106.90.

Candlesticks

A white body occurred (because prices closed higher 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 26 white candles and 24 black candles for a net of 2 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 19.0388. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 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 44.20. 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 38 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 -146.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.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 8 period(s) ago.

Rex Takasugi – TD Profile

FOREX JPY= closed up 0.030 at 106.930. Volume was 9% above average (neutral) and Bollinger Bands were 34% narrower than normal.

Open     High      Low     Close     Volume___
106.900 107.120 106.570 106.930 98,770
Technical Outlook 
Short Term: Oversold
Intermediate Term: Bullish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 107.49 106.98 109.09
Volatility: 6 9 7
Volume: 91,939 95,099 91,491

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 2.0% below its 200-period moving average and is in an upward 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 bullish on JPY= and have had this outlook for the last 20 periods.

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