Japanese Yen: USD/JPY (JPY=X) watching politics

Japanese Yen: USD/JPY (JPY=X) watching politics

Japanese Yen: USD/JPY (JPY=X) watching politics

The on-going Bank of Japan (BoJ) meeting finds the conclusion due 19 September with markets widely expecting the BoJ to hold steady, an assumption likely to remain status quo for a long time to come.

The true focus for the week, however, would be with trade tensions instead amid the uptrend for USD/JPY.

Holding steady for an extended period

Having stated in their July monetary policy statement and via BoJ governor Kuroda’s comments, the BoJ is clearly committed to holding interest rates steady for ‘an extended period of time’. This had followed the recent introduction of flexibility to their policy in July, reflecting their intent to guide the market’s expectation in the direction of a steady policy even with a move being the eventuality.

Indeed, examining the situation, with the Japanese economy still heavily reliant upon the monetary stimulus, any move would be pulling the rug from under the feet for Japan at present. This is amid the mixed situation within the economy where the latest positive Q2 growth, the quickest since Q1 2016 at 3.0% year-on-year, had been accompanied by the sustained lack of inflation growth, last seen at 0.8% year-on-year for the core reading in July. The Bank of Japan has their eyes set on a 2 percent target for the country’s inflation growth to align with the performance of a healthy economy, one that has the market questioning. While BoJ governor Kuroda may well face questions regarding the lack of bond yield fluctuations following July’s changes, comments here may lack the gunpowder to move prices. A non-event will most likely characterise the upcoming meeting after having seen them introduce changes only recently as with the European Central Bank.

Overall, the bias in prices is: Upwards.

By the way, prices are vulnerable to a correction towards 110.93.

The projected upper bound is: 113.52.

The projected lower bound is: 111.22.

The projected closing price is: 112.37.

Candlesticks

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 24 white candles and 25 black candles for a net of 1 black 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 89.5317. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 14 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 61.73. 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 sell 44 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 148.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 9 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 18 period(s) ago.

Rex Takasugi – TD Profile

FOREX JPY= closed up 0.010 at 112.360. Volume was 99% below average (consolidating) and Bollinger Bands were 21% narrower than normal.

Open High Low Close Volume___
112.340 112.380 112.330 112.360 1,456

Technical Outlook
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish

Moving Averages: 10-period 50-period 200-period
Close: 111.63 111.38 109.75
Volatility: 7 7 8
Volume: 80,525 100,582 104,790

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 2.4% 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 8 periods.

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