Japanese Yen: USD/JPY (JPY=X) trend is likely to continue because of uncertainties over U.S.-China trade relations
The Dollar/Yen closed lower for the first time in three weeks in reaction to several factors including mixed central bank decisions, lower Treasury yields and a drop in demand for higher risk assets. The primary catalysts behind the weakness are concerns over U.S.-China relations.
Early in the week, the biggest worry was an escalation of tensions between the United States and Iran, but the Forex pair recovered as that threat dissipated. However, late Friday, the Dollar/Yen collapsed when a low-level Chinese trade delegation cancelled a trip to U.S. farms and abruptly went down.
Early Week Sell-off
Flight to safety demand jumped on September 16 following a weekend attack on Saudi production facilities. However, the Forex pair recovered by mid-week after Saudi officials promised to be back on line by the end of the month.
Bullish Initial Response to Fed Decisions
The Dollar/Yen hit its high for the week at 108.478 on September 18, following the release of the U.S. Federal Reserve interest rate and monetary policy decisions. The Fed cut its benchmark interest rate by 25-basis points as expected, but the vote was mixed, suggesting uncertainty over future rate cuts. Additionally, Fed Chair Jerome Powell once again said the rate cuts were insurance against a weakening economy. The uncertainty over future rate cuts was enough to provide support on the close.
Bank of Japan Leaves Rates Unchanged but Hints at Future Cuts
The BOJ kept monetary policy on hold but hinted at possible action in October. Policymakers held overnight interest rates at minus 0.1 percent, its target for 10-year bond yields at around zero percent, and the pace of its asset purchases at 80 trillion Yen ($740 billion) a year.
The BOJ’s board voted for the decision by a majority of 7-2, with the dissents coming from policymakers who wanted greater stimulus.
Central bankers also gave an explicit warning that it was concerned about risks to the economic recovery and promised a review at its next meeting, after Japan’s consumption tax rises from 8 percent to 10 percent at the end of this month.
“With the slowdown in overseas economies continuing and downside risks on the increase, we judged it’s becoming necessary to pay closer attention to the possibility of losing momentum towards our price stability goal,” said Haruhiko Kuroda, BOJ Governor, in a press conference after the decision.
“Bearing that in mind, we’ll re-examine trends in activity and prices at our next meeting, when we publish our economic outlook report.”
Overall, the bias in prices is: Sideways.
The projected upper bound is: 109.16.
The projected lower bound is: 106.26.
The projected closing price is: 107.71.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 7 white candles and 3 black candles for a net of 4 white candles. During the past 50 bars, there have been 27 white candles and 23 black candles for a net of 4 white candles.
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 27.3648. This is not an overbought or oversold reading. 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 55.00. 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 29 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 13. 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 25 period(s) ago.
Rex Takasugi – TD Profile
FOREX JPY= closed up 0.160 at 107.710. Volume was 98% below average (consolidating) and Bollinger Bands were 29% wider than normal.
Open High Low Close Volume___
107.520 107.760 107.520 107.710 2,156
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 107.94 107.09 109.26
Volatility: 5 9 7
Volume: 85,335 91,270 91,658
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 1.4% below its 200-period moving average and is in an upward 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 bullish on JPY= and have had this outlook for the last 11 periods.
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