Japanese Yen: USD/JPY (JPY=X) – Japan’s Economy is Feeling the Chills from Coronavirus

Japanese Yen: USD/JPY (JPY=X) – Japan’s Economy is Feeling the Chills from Coronavirus

Japanese Yen: USD/JPY (JPY=X) – Japan’s Economy is Feeling the Chills from Coronavirus

As the coronavirus continues to preoccupy the financial markets, the ramifications of the outbreak are being felt worldwide. Those countries with extensive commercial links with China are facing the growing possibility that the virus will cause extensive damage to their economies. Pacific countries such as Australia and Japan are scrambling to deal with the outbreak, with no indications that Chinese authorities will be able to contain the virus anytime soon.

Japan’s economy has been lukewarm, and the coronavirus is putting a severe strain on some key sectors of the economy. The Japanese tourist industry relies heavily on Chinese tourists, which make up some 30 percent of all visitors to Japan. As a result of the virus, China has banned overseas group tours and Japan has barred entry to tourists from the two provinces most affected by the outbreak, Zhenjiang and Hubei.

These severe travel restrictions could not have occurred at a worse time, as the period of the Chinese Lunar New Year (between February and March) is a peak travel time. The loss of over a million Chinese tourists has taken a toll on Japan’s services sector, with restaurants, retail stores and other establishments reporting a sharp drop in business. The dramatic scenes of the Princess Diamond, a cruise ship which has been detained in Yokohama since many passengers have the virus, are likely to deter many potential tourists from visiting Japan. Analysts estimate that the economic toll on the tourist industry will reach $1.8 billion.

Coronavirus has also disrupted supply chains for major Japanese companies, particularly in the auto industry. Toyota, Honda and Mazda have all been forced to close down their Chinese plants due to the outbreak, with workers barred from reporting to work. The outbreak is expected to significantly lower China’s GDP in 2020 and this will have a chilling effect on Japan’s critical export sector.

The grim news coming out of China is also putting pressure on the Japanese yen. USD/JPY has dipped 1.3% in February and the yen is likely to weaken as the extent of the outbreak’s toll on Japan’s economy becomes clearer.

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: 110.72.

The projected lower bound is: 108.93.

The projected closing price is: 109.83.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 5 white candles and 4 black candles for a net of 1 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 39.5350. This is not an overbought or oversold reading. The last signal was a sell 4 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 54.94. 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 134 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 52. This is not a topping or bottoming area. The last signal was a sell 2 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 7 period(s) ago.

Rex Takasugi – TD Profile

FOREX JPY= closed up 0.060 at 109.800. Volume was 96% below average (consolidating) and Bollinger Bands were 1% wider than normal.

Open     High      Low     Close     Volume___
109.770 109.880 109.730 109.800 3,061
Technical Outlook 
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 109.80 109.35 108.37
Volatility: 5 5 7
Volume: 79,884 75,831 86,524

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 6 periods.

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