BoJ Unchanged While The Buck Splutters
Vantage | Oct 08, 2015 12:20AM ET
Ah the cherry blossom filled Japanese countryside. So peaceful… Now lets ruin it with some currency talk shall we!
Yesterday saw the Bank of Japan leave monetary policy unchanged, giving a slight boost to the Japanese Yen in the process. With no change to their famed quantitative easing program largely expected, the USD/JPY sellers looking for a miss were left out in the cold.
Giving some traders a reason to look for a miss in expectations and play for a USD/JPY pop, was a belief that recent weakness in Japanese data would push the central bank to prolong its QE program further.
“There is absolutely no change to our stance that we will steadily implement quantitative and qualitative easing to achieve the 2% inflation target at the earliest possible time.”
Kuroda did sort of ignore the fact that exports and commodity prices are both falling and actually pushing the Japanese economy further away from the bank’s 2% inflation target for next year. There is definitely more action to come in this pair but for now the market is happy to buy what was said and focus on USD weakness and the technicals.
USD/JPY Daily:
Compare this chart with the one in yesterday’s trend line resistance level that we’ve been keeping an eye on over the last few weeks.
With the BoJ statement largely in line with expectations, most of this move is USD weakness related, with technical resistance providing the catalyst for the selling. Following the path of least resistance here seems the safer play for now.
On the Calendar Thursday:
GBP MPC Official Bank Rate Votes
GBP Monetary Policy Summary
GBP Official Bank Rate
USD Unemployment Claims
GBP BOE Gov Carney Speaks
USD FOMC Meeting Minutes
Chart of the Day:
Coming off the back of yesterday’s Bank of Japan monetary policy statement and into tonight’s Bank of England bank rate decision, we really had nowhere else to look for today’s chart of the day than ‘Geppy’ – GBP/JPY.
GBP/JPY Weekly:
I’ve included the weekly chart here for longer term context around the trend lines that are now in play.
Remember our trend line subjectivity discussion ? Well here we are again, with 2 variants of the weekly trend line depending on how you look at it. I’ve included both, with the solid line being the 1 that is currently in play.
GBP/JPY Daily:
Zooming into the daily, I’ve highlighted a possible level of interest that price is approaching. Here we have a confluence of both re-tested trend line resistance as well as a horizontal zone that has seen plenty of reaction in the past.
Get The News You Want
This is the type of zone that is often good for a short term bounce off of, but rarely do they hold when faced with a momentum move into them like we are seeing here with the Pound strength.
If you like this setup, just make sure you are banking your pips and not standing on the tracks waiting to get hit by the train that you’re stepping in front of.
Risk Disclosure: In addition to the website disclaimer below, the material on this page prepared by MetaTrader 4 for Mac . The research contained in this report should not be construed as a solicitation to trade Forex. All opinions, news, research, Forex analysis, prices or other information is provided as general market commentary and marketing communication – not as investment advice. Consequently any person opening a Forex trading account and acting on it does so entirely at their own risk. The experts writers express their personal opinions and will not assume any responsibility whatsoever for the actions of the reader. We always aim for maximum accuracy and timeliness and Vantage FX shall not be liable for any loss or damage, consequential or otherwise, which may arise from the use or reliance on the service and its content, inaccurate information or typos. No representation is being made that any results discussed within the report will be achieved, and past performance is not indicative of future performance.
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.