Japanese Yen: USD/JPY (JPY=X) – Japanese Prime Minister Shinzo Abe pledged “huge” stimulus
Last week, the Dollar/Yen tumbled as investors shed their safe-haven positions in the greenback after the Federal Reserve announced unprecedented stimulus measures and President Trump signed the biggest financial aid package in history. Both moves mean there will be plenty of U.S. Dollars available to alleviate the strain in the credit markets.
While the U.S. government and central bank were preparing to soften the impact of the coronavirus on the global economy along with several other major governments and central banks, the Bank of Japan held its ground by refraining from further rate cuts since its benchmark rate was already negative.
There were also rumors that the BOJ was preparing to make a major stock index ETF buy. However, reports also showed the central bank is also losing a lot of money on its recent investments. Finally, the government postponed the Olympic Games, scheduled for this summer. Investors actually liked this announcement because they did not cancel the event.
US Events Weigh on Dollar Demand
The USD/JPY retreated last week as trillions of dollars’ worth of stimulus efforts by governments and central banks helped temper a rout in global markets triggered by the coronavirus pandemic.
Last Monday, the Federal Reserve announced a barrage of new programs to help keep the market functioning. Among the moves is an open-ended commitment to keep buying assets under its quantitative easing measures. There are multiple other programs, including one for Main Street business lending and others aimed at keeping credit flowing. The Fed will also be moving for the first time into corporate bonds, purchasing the investment-grade securities in primary and secondary markets and through exchange-traded funds.
On Friday, President Donald Trump signed an unprecedented $2.2 trillion economic rescue package into law after swift and near-unanimous action by Congress to support businesses, rush resources to overburdened health care providers and help struggling families during the deepening coronavirus epidemic.
Japan to Spend Over $137 Billion as Virus Hits Economy
Although the BOJ refrained from cutting rates aggressively or promising to implement quantitative easing practices, last week, Japanese Prime Minister Shinzo Abe pledged “huge” stimulus that will involve spending of at least $137 billion financed in part by deficit-covering bonds, sources said, joining global efforts to cushion the economic blow from the coronavirus pandemic.
While the amount of debt issuance is likely to be modest, it will put considerable market focus on Japan’s dire fiscal position – at a time the market rout caused by the outbreak is prodding investors to dump even safe-haven assets like government bonds in favor of cash.
“We need to come up with big, powerful and fiscal measures that meets the enormous magnitude of the hit from the coronavirus outbreak,” Abe told parliament last Monday.
“Depending on the situation, we’ll take measures that exceed in scale those taken after the Lehman crisis,” he said.
Overall, the bias in prices is: Downwards.
The projected upper bound is: 110.90.
The projected lower bound is: 104.05.
The projected closing price is: 107.48.
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 21 white candles and 27 black candles for a net of 6 black candles.
Three black candles occurred in the last three days. Although these candles were not big enough to create three black crows, the steady downward pattern is bearish.
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 8.7388. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 2 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 45.81. 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 14 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 -29. This is not a topping or bottoming area. The last signal was a sell 2 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 buy 9 period(s) ago.
Rex Takasugi – TD Profile
FOREX JPY= closed down -0.360 at 107.530. Volume was 49% below average (consolidating)(neutral) and Bollinger Bands were 175% wider than normal.
Open High Low Close Volume___
107.880 107.970 107.100 107.530 50,452
Short Term: Oversold
Intermediate Term: Bullish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 109.58 108.89 108.32
Volatility: 22 20 12
Volume: 155,047 118,688 94,198
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 0.7% below 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 6 periods.