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Implied volatility screams higher ahead of the BOJ meetingOvernight implied volatility has risen sharply higher for yen pairs ahead of tomorrow’s Bank of Japan (BOJ) meeting. In fact, they now sit at their highest level since Brexit, which saw some yen pairs produce double-digit percentages moves (to the favour of the yen) following the infamous vote. Why are traders on edge ahead of tomorrow’s BOJ meeting? The BOJ surprised market in January by doubling their target band of the 10-year JGB from +/- 0.25% to +/- 0.5% ‘around’ zero. Given they had denied for months they would exactly that, it quickly led to speculation that the BOJ are now veering away from ultra-loose monetary policy, and this was just an important first step. But things are never straight forward with the BOJ as there are several moving parts for their policy, so we’ll take a look at some potential scenarios. The BOJ could abandon YCC (yield curve control) There is a growing expectation for the BOJ to either widen the band (to 0.75% or 1%) or scrap it all together. On one hand this is plausible as Kuroda finishes his 10-year term in April, and he may want to provide a smooth transition to his successor. But the BOJ have already proven they don’t need a meeting to announce such a move, as we saw on the 3rd of January. And do they need to widen it so aggressively twice in the same month? Personally I suspect the BOJ are unlikely to widen their YCC further, given the increased levels of volatility it has caused for Japan’s bond markets over the past few weeks. Furthermore, this seems to have quickly become a consensus view – and the BOJ don’t have a great record of playing along with the consensus. And this leaves the yen to a broad sell-off (stronger USD/JPY) if they keep YCC in place. Could the BOJ raise interest rates? I suspect this to be a very low probability event, but take nothing for granted with the BOJ. Also, it is the low probability event which spark the largest reactions, and a surprise hike to zero or higher is likely to send USD/JPY lower, along with the Nikkei 225. But as the year progresses there’s a much greater chance that the BOJ will revert to ZIRP (zero interest rate policy), and if inflation remains elevated they could even raise rates to 0.1% or 0.2% further down the track. Perhaps a form of QT (quantitative tightening)? Assuming the BOJ intend to scrap YCC before Kuroda exits (but it is not announced tomorrow), a potential first step would be to limit the amount of JGB purchases in the January meeting before wrapping it up at their March meeting. The BOJ could switch to an inflation target ‘range’ Not many are discussing this that scenario, which is partly why I like it. I don’t think the BOJ will scrap their inflation target all together, but they might announce a target range of 2-3%. We know that the PM has been calling for more flexibility with the inflation target, and this seems like a plausible compromise from the BOJ. Yet this is a scenario to plan for as it gives the BOJ greater wriggle room with their policy – so may provoke a less directional response from markets. Overnight Implied Volatility levels for USD/JPY At the time of writing, overnight implied volatility has risen to ~340 pips above or below 128.95, which provides a range of 125.14 to 131.84. 1-week IV is a whopping 900 pips and the 1-month has blown out to 1874. So traders are clearly taking this meeting very seriously. It is worth noting that implied volatility is not a precise target and essentially tells us options traders estimate with ~68 probability of prices closing within the implied range. Furthermore, I have noticed a tendency for markets not to reach the suggested upper or lower bounds of the range when IV explodes like it has today. This could be because markets are now fully prepared for a large event and much of the shock factor has been priced in. Implied volatility was low ahead of the BOJ’s surprise announcement on the 4th of Jan, but much higher after the event (and the same can be said for Brexit). With that said, it is likely to be a volatile event regardless even if not as volatile as the IV’s currently suggest. Either way, risk must be managed accordingly – even if it means not trading the actual event. USD/JPY 4-hour chart Prices have retraced against the bearish trend on the 4-hour chart. If prices continue to drift higher I doubt it will have the legs to reach the 130 resistance zone ahead of the meeting, but we may see further bearish interest as we get close to the meeting with expectations for a hawkish meeting remaining high. • With several upper wick forming on the 4-hour chart then bears could consider fading into minor rallies into the highs with a loose stop, to anticipate a move lower ahead of the meeting. • Trading around the actual announcement may prove futile given the potential for volatility and the spread blowing out. • But once the dust has settled and traders get a clearer picture of what the BOJ have done (or not), it would be a cause of deciding if the meeting was hawkish (USD/JPY bearish) or dovish (USD/JPY bullish) relative to high expectations of the former.
by CityIndex
USD/JPY roars back after solid NFPThe Japanese yen has been on an impressive streak but has dropped sharply on Monday. USD/JPY is trading at 135.83, up 1.13% on the day. The US dollar is showing some signs of life, courtesy of Friday's US employment report, which was stronger than expected. The economy created 263,000 jobs in November, slightly lower than the October reading of 284,000 but well above the consensus of 200,000. Wage growth also outperformed, as the reading of 5.1% y/y was up from 4.9% and beat the forecast of 4.6%. The labor market continues to show a surprising resiliency and the increase in wage growth will drive inflationary pressure. It was less than two months ago that the ailing Japanese yen was below the 150 level and there was increasing talk of Tokyo implementing another currency intervention to save the currency. The yen has turned the tables, gaining a superb 7.4% in November and another 2% so far in December as it trades at its highest levels since mid-August. At the same time, it's important to note that the yen's recent upswing is more a story of broad weakness on the part of the US dollar rather than newfound strength in the Japanese currency. The Bank of Japan has no plans to change its ultra-accommodative policy, which has capped rate yields and weighed heavily on the yen, which is still down by about 18% against the dollar this year. With the Fed signalling that rates could go higher than it previously anticipated, the US/Japan rate differential will continue to widen and make the yen less attractive to investors. Japan releases Household Spending later today for October, with a consensus of 1.0%. The downturn is expected to continue, following a 2.3% gain in September and 5.1% a month earlier. This will be followed on Wednesday with GDP for Q3, with an estimate of -1.1%. The economy contracted by 1.2% in the second quarter, so another decline in growth would mean that technically the economy would be in recession. If these releases are weaker than expected, the US dollar could gain more ground. USD/JPY is putting strong pressure on resistance at 135.96. Above, there is resistance at 1.3699 There is support at 1.3412 and 1.3333
by OANDA
USDJPY: What to expect for the upcoming days?Hello there! So after the Q3, and the decisions that has been taken by the BOJ concerning the interest rate, in addition to the 0.4% rise in the CPI. As well as the decrease in the DXY during the last month -4.79% and in the last 5 days a decrease that resulted -3.13%. Those factors alone can picture the path of the USDJPY. Going now into the technical part, too many indicators said the way now is bearish, but let's take things more friendly and talk about the structure. Now in lower time-frames, we can see that there was an order block that indicated that the currency will go bull to reach approx. (141.600 - 141.800). But it seemed that it reached something of 140.800, and went bear. So what we could exepect after this small hike? Well, according to some indications and order blocks, taking into consideration the supp. and res. areas, the currency could reach (133.300). But, following the news and the decisions that could be taken will be the ones who decide if the USDJPY will rally down more, or go for a reversal. But in the mean time, nothing indicates at all a reversal based on decisions from the federal reserve or the BOJ, as well as the technical analysis.
Short
by JawadShoukeir
USD/JPY eyes US nonfarm payrollsUSD/JPY has been hovering close to the 145 line most of the week, and the trend has continued today. In the European session, USD/JPY is trading at 144.81, down 0.21%. The US releases nonfarm payrolls later today. The release once received massive coverage and was usually a market-move, but the new era of high inflation and global tightening has stolen much of NFP's thunder. Still, the indicator is an important bellwether of the health of the US economy and could provide insights into future rate moves from the Federal Reserve. The consensus for the September nonfarm payrolls stands at 250,000, lower than the 315,000 recorded in August. The US labour market has been very robust, and investor reaction will likely be muted if the consensus is not wide of the mark. The markets will be more focussed on hourly earnings and the participation rate - soft readings would raise speculation that the Fed could ease up sooner rather than later, which would be bearish for the US dollar. Conversely, hot readings would support the Fed remaining hawkish, which would give the US dollar a boost. Japan will also be keeping a close eye on today's US jobs reports. The Ministry of Finance (MOF) has shown that is willing to intervene to prop up the Japanese yen, and a stronger-than-expected NFP could be the trigger for another round of intervention. Since the dramatic intervention on September 22nd, the yen has moved only slightly above the 145 level, which could well be a 'line in the sand' for the MOF.  The MOF intervention, which was meant as a warning against speculators, likely cost 2.84 trillion yen. The move led to Japan's foreign currency reserves falling to their lowest level since 2017. With the Bank of Japan capping JGB yields and the Fed continuing to deliver oversize rate hikes, the US/Japan rate differential is widening, which means the yen will likely continue to lose ground, barring another currency intervention by the MOF. There is resistance at 145.36 and 145.97 USD/JPY has support at 144.29 and 143.68
by OANDA
1
I entered a short USDJPY position on Friday evening, this is whyIt seems stupid to trade against the dollar right now, huh? Well, I think there is potentially a good early shorting opportunity against the Yen. This is why... The Fundamental View 1. The BOJ intervened in the Forex markets on Thursday 22nd September. This is just the start. I understand that the BOJ are doing this by themselves (without the support of the Fed or other economic powers) but they definitely have some Yen buying power - what a move they caused on Thursday! The BOJ could definitely cause at least one or two more moves like this, and I really wouldn't mind being on the right direction of those moves. I understand that the BOJ's buying power may not outweigh the current USD buying power, but this leads me to my second point... 2. Dollar is king right now. No one would disagree with that. After this weeks moves though - and I guess the moves from the last couple of months - I think the dollar buying could finally lose some steam. I am not suggesting that the selling is over, but the bulk of selling may becoming to an end, which could mean the JPY could have the upper hand when it comes to buying power. The markets seem to have finally accepted the reality of recession and high inflation, which is currently being priced in - hopefully "fully" priced in within the coming days. Even if dollar pairs bounce for a few days, this could give the JPY the weight it needs to bring USDJPY down. 3. For those willing to trade against the dollar right now, or trade against the dollar in coming days or weeks, which non-Dollar currency are people going to buy? The pound?! No. The Euro?! No. Maybe the Australian Dollar but the Yen - who's central bank is actively intervening to strengthen it - seems like the obvious choice to me. The Technical View 1. On the lower time-frames, price is around key FIB levels based on Thursday's bearish move. 2. On the 1 hour, price is also testing a clear horizontal level 3. On the 4 hour, price is also around a previous diagonal support area as resistance 4. On the weekly, price is historically far from the weekly moving averages, suggesting some downside/correction/retrace may be due Obviously, price could continue to move higher . If it does, I will continue look for technical reasons to sell based on my fundamental beliefs .
Short
by Samuel_Morton_Trader
USD/JPY hits 137, Powell speech eyedThe Japanese yen is in negative territory today. USD/JPY is trading at 136.90 in the European session, up 0.34%. It has been a relatively quiet week for the yen, which is trading exactly where it started the week, around the 137 line. The month of August has not been kind to the yen, with USD/JPY soaring 2.75%. The US dollar is again in favor as the markets have tapered down their excitement that the Fed plans a dovish pivot. Does the Fed plan to let up or remain aggressive in its fight against inflation? We will certainly be smarter after Jerome Powell's speech at Jackson Hole later today. A hawkish message from Powell should boost the US dollar unless investors zero in on any dovish remarks or projections, which could reignite speculation that the Fed will ease up on rate hikes. The Tokyo Core CPI index rose 2.6% in August, above the forecast of 2.5% and higher than the 2.3% gain in July. This marked the highest gain since October 2014. Policy makers in other major economies can only dream about inflation below 3%, but for Japan, rising inflation is a new phenomenon after decades of deflation. Inflation has exceeded the Bank of Japan's target of 2% for four successive months and inflation is finally on the Bank's agenda. Still, it is very unlikely that the BoJ will do anything more than tweak monetary policy, as its number one goal is to stimulate Japan's fragile economy. The rise in inflation and the BoJ's rigorous control of its yield curve has caused a steep deprecation of the yen, and an exchange rate of 140 may not be far off. There has been speculation in recent months that the Ministry of Finance could intervene to support the yen, but this has not happened until now and there is no indication that the 140 level is a magical 'line in the sand' that would trigger intervention.  For now, the main driver of USD/JPY remains the US/Japan rate differential, leaving the yen at the mercy of the movement of US Treasury yields. USD/JPY is testing resistance at 137.03. Above, there is resistance at 137.03 1.3615 and 1.3504 are providing support
by OANDA
USDJPY fundamental analysis: Is the yen out of the woods now?The Japanese yen rose to 133 against the dollar ( USD/JPY ), recovering from its 24-year lows. Short-term tailwinds are supporting the yen as the market has repriced Fed interest rate risks to the downside and has already priced in a rate cut in the first half of 2023. The yen is currently doing well in its traditional role as a recession hedge, with the US economy in a “technical recession” and the need to maintain growth “below potential” for a while in order to rebalance supply and demand. The yen has also recently received fresh support after Bank of Japan Deputy Governor Masayoshi Amamiya acknowledged that the BoJ should start considering the tools for ending ultra-loose monetary policy, even though the actual shift will not take place soon. USD/JPY vs US/Japan 2-year spread Treasury yields are falling, providing some relief to the rate differential between the United States and Japan, which has been the primary driver of the yen’s depreciation this year. The 2-year yield spread between the United States and Japan has narrowed to around 300 basis points (or 3pp), as the US 2-year yield fell to 2.87 percent, while the Japan 2-year yield remained negative at -0.1 percent. Despite this short-term narrowing of the US/Japan rate spread, the monetary-policy gap between the Fed and the BoJ still remains well in place, which may prevent the yen from strengthening too much against the dollar, unless some major catalysts occur. What could push USD/JPY below 130? The first refers to disappointing US employment and economic data, which would support an economic slowdown. If this is coupled with easing inflationary pressures, it would strengthen market expectations of a Fed’s policy U-turn in early 2023, pushing the 2-year US/Japan differential to 2.5 percent or slightly below. This level is consistent with a USD/JPY pair in the 128-130 range. The second factor that could support the yen’s resurgence is Japan’s rising inflation rate, which, despite remaining relatively low, has risen for 10 consecutive months, exerting pressure on the Bank of Japan to change its monetary policy. Bottom line: short-term relief, but medium-term doubts In general, the macro picture may be tilting in favour of the yen, at least in the short term, but the downside risks, in the medium term, are not over. The Fed has already stated that the Q2 GDP figures should be taken with “a grain of salt” because the labour market remains very solid and tight for an economy in recession. There will still be two inflation prints in the United States between now and the September 21 FOMC meeting. Despite the fact that the United States was already in a de facto recession in the first half of the year, inflation has continued to rise. As a result, it will be remarkably difficult to bring inflation down quickly, implying that the Fed must maintain a hawkish stance for the months to come. Analysis by Capital.com's forex and metals analyst Piero Cingari
by Capitalcom
EUR/JPY - BUY SET UP ON ECB RATE HIKES The EURO now sits under 138.000 on the exchange rate, a key resistance level that will now surely break after European Inflation hit 8.1% for the month of April 2022, igniting the debate about whether the ECB should be raising rates at 0.50% increments instead of 0.25% increments as signaled by Christian Legard. With European Bond Yields climbing and paying a premium over Japan, the EURO will likely continue to strengthen against the YEN as interest rates rise in Europe. The overnight carry trade will start to become profitable for the EURO into 2023, which is likely to attract investors into buying the currency pair.
Long
by KayansMarkets
USDJPY bullish scenario:USD/JPY consolidates the biggest daily gains in 12 days, recently off intraday low. That happened after BOJ Minutes unveiled a conversation on the impacts of the weak yen on the Japanese economy, a few members backed ultra-easy policies. While discussing the impacts of the weaker yen on the economy, a few of the BOJ policymakers backed ultra-easy measures citing the inflation’s multiple failures to reach the 2.0% target. “A few members said weak yen exerting positive effects on Japan's economy as a whole even though effects of pushing up exports are lower than before,” adds the BOJ Minutes. In this pair, technical analysis shows a technical figure Triangle. The Triangle broke through the resistance line on 22/12/2021. USDJPY is forming a bullish formation on a daily chart . If the price holds above this level, we will have a possible bullish price movement with a forecast for the next 18 days with a target of 115.523. According to the experts, your stop loss should be around 113.140 if you enter this position. Risk Disclosure: Trading Foreign Exchange (Forex) and Contracts of Difference (CFD's) carries a high level of risk. By registering and signing up, any client affirms their understanding of their own personal accountability for all transactions performed within their account and recognizes the risks associated with trading on such markets and on such sites. Furthermore, one understands that the company carries zero influence over transactions, markets, and trading signals, therefore, cannot be held liable nor guarantee any profits or losses.
Long
by legacyFXofficial
1
Updates: Bank of Japan meeting's of monetary policy!!!For tomorrow, at 2 a.m. in the New York Time, Japan have a meeting by the Japan Central Bank to know the Japan's monetary policy. It's important to know how is the situation based in the interest rates in the Japan. I believe that this par could to produce a sell-off of US Dollar, maybe, I did open up the short position of the par because we hope a good news of Bank of Japan about their interest rate. Now, don't recall that US Dollar is gains momentum, but as tomorrow I am to the specualte news and alert of the Bank of Japan at 2 a.m. in the New York Time. In Daily timeframe we appear in formation of simetric triangle. I expect a little sell of US Dollar before to continue up!!! And in H1 timeframe, we are into this bearish risign wedge, as we are into this bearish rising wedge, we expect another confirmation in the $104.42 JPY as possible entry in longs position in this support line htat form a simetric triangle to buy it. So guys, in summary, I'm trade with economic news about the interest rate meeting that make Bank of Japan's today!!!
Short
by harisonhbn9718
UK labor market gives the BoE's room for maneuverThe main event of yesterday in terms of macroeconomic statistics was the publication of statistics on the UK labor market. The data pleasantly surprised. Recall that we expected rather weak statistics - the British economy has been painfully unconvincing in recent times. Nevertheless, the UK economy for three months until November created 208K new jobs, which is almost 2 times higher than analysts' expectations. The average weekly wage also came out better than expected (+ 3.2%). Against the background of such data, supporters of the fact that the Bank of England will lower the rate at the next meeting sharply fell silent. Indeed, data on the labor market show that the Central Bank has no reason to rush. This sharply increased the chances that the bet will be left unchanged. The pound, of course, reacted positively to statistics and a shift in market expectations. Recall in this regard to our recommendation to buy a pound on the slopes. In general, for Europe yesterday was a good day. Indices from the ZEW Institute came out very good (relative to past data) both in the Eurozone as a whole (the expectations index came out almost 2 times higher than in December) and in Germany (the expectations index was +26.7 with a +15 forecast). So the growth of the euro looked quite natural. But for its continuation, this impulse will be clearly not enough. In this regard, Thursday looks more promising: on this day, the ECB will announce its decision on the monetary policy parameters in the Eurozone. But we'll talk about this in tomorrow's review. And today, the main event will be the announcement of the Bank of Canada’s decision on monetary policy parameters. Experts do not expect any changes. We are also inclined to believe that the bid will be left unchanged. But given the general trends in the development of the global economy in general and in Canada, in particular, there are risks of a rate reduction. Moreover, the reduction potential is far from exhausted, unlike the ECB or the Bank of Japan. Considering that the USDCAD pair has been treading water for two weeks now, fluctuating in the range of 50 points, there is a possibility of a strong movement in pairs with the Canadian dollar today. Moreover, the direction of movement is not obvious. Our recommendation in this regard is to work along the way. That is, if the pair goes above 1.3090 - we buy, if below 1.3020 - we sell.
Long
by Trade24Fx
Central Banks week and the IMF head expects a crisisMonday turned out to be a fairly calm day for financial markets. The reason on the surface is a day off in the USA. So today it will almost certainly be more volatile and interesting. The Bank of Japan set the pace to the news background early in the morning. Monetary policy parameters were left unchanged. The press conference will be somewhat later than the publication of this review, so if any interesting details come up, they will talk about them tomorrow. Today will be interesting statistics on the UK labor market. Considering how disastrous the data on the British economy last week was, one should not expect any positive. Nevertheless, we continue to believe that Brexit is the main driver of the pound, and statistics in the current reality can lead only to local movements. Accordingly, weak data, of course, will provoke sales but are unlikely to lead to the formation of a trend. This means that purchases in intraday oversold areas remain relevant to us. Let's get back to the events of yesterday. Perhaps the most significant was the opening of the oil market with a gap up. The reason is concerns about the supply on the market. The fact is that Iraq and Libya drastically reduced oil production. In Iraq, because of protests, in Libya, because of armed groups that blocked the pipeline. And although it is very likely that these force majeure are temporary, we recall our recommendation to buy oil, which continues to be relevant in the current conditions. We also continue to be supporters of the impending crisis, or at least the strongest correction in the US stock market. So it was nice to note the replenishment in our ranks. The head of the IMF, Kristalina Georgieva, in her last interview, compared the current situation to what was happening in the world on the eve of the Great Depression. A key common feature of the 1920s and the present situation is excessive financial squandering. According to the head of the IMF, depression cannot be avoided. The whole question is only in time. In this regard, we recall our recommendations on buying safe haven assets (gold in the first place and Japanese yen in the second), as well as the “trading idea of the decade” - in the sale of shares of high-tech companies in the US stock market.
Short
by Trade24Fx
Trump Impeachment, infernal sanctions, BoE & BoJUS President Donald Trump has been impeached by the Democratic-led House of Representatives for obstruction of Congress and abuse of power related to his dealings with Ukraine. The votes made Trump only the third president in United States history to be impeached and set the stage for a likely trial in the Republican-led Senate in January. This event has already been included in current prices and moods in the financial markets. Note, the fate of Trump is in the hands of the Senate, and there are 2/3 of the Republicans, so, Trump is not in danger. Nevertheless, we cannot but note that our already strong desire to sell the dollar after such news only intensified. After a volatile market on Tuesday, Wednesday became a respite day. But today there is a possibility of the return of strong movements in pound pairs in the foreign exchange market. It is about the announcement of the results of the Bank of England. Experts expect the parameters of monetary policy in the country to remain unchanged. In general, this will be in line with the current mood of the leading Central banks in the world, which have taken a break and are following the development of events. So, surprises should be expected only from Mark Carney’s comments. Our expectations and a trading plan for today. As the pound sales dwindled yesterday. The markets have calmed down. So you can not be afraid of a crazy panic wave, which will be able to absorb our position beneath. Therefore, today we are returning to the idea of buying a pound both on the intraday and in the medium-term positions. The EU and Johnson’s comments could provoke local outbursts of volatility, and the direction of the price dynamics of the pound will be determined by the nature of information injections. But if you sit and wait for this kind of information, then you can freeze trading activity at all. So do not be afraid of opening the trade - the only restriction taking into account current realities is setting up the stops for each of the trade. Recall that we believe that the pound’s real value is 500, or even 1000 pips more expensive, which means buying is a promising trading idea. Among other trading ideas, we note simply excellent points for the sale of the Russian ruble. The fact is that yesterday the relevant committee of the US Senate approved sanctions against Russia for interfering in the elections. We are talking about the so-called "hellish sanctions." Of course, the bill still needs to be voted on and given to Trump for signature, so it is still a long way from implementation. The fact that the process is in progress cannot but put pressure on the ruble. That is why its current price is a gift that is simply a sin to refuse from. But in order to make this position more balanced, we recommend using oil purchases as a hedge. Actually, the ruble is growing because of oil growth. Even after the announcement of the OPEC + decision to increase production cuts, we recommend buying oil. So far, the dynamics of the asset fully justify this recommendation, which testifies in favour of our correct understanding of the situation. The Bank of Japan has already announced its decision. The expected monetary policy parameters remained unchanged. Therefore we purchase the Japanese yen. Low volatility, coupled with the USDJPY near to the top of the medium-term range, makes the deal quite profitable on the other hand with very limited risks. That is, sales of the USDJPY from 109.60 with stops above 109.90 and minimum profits of about 108.50 (or even 107.30) make the deal extremely interesting.
by Trade24Fx
Results of Central Banks, US GDP and ADPLet’s analyze the key events of yesterday. Consumer confidence in the Eurozone is rather depressed, as indeed the entire economy of the Eurozone. But at the same time, the euro did not show any specific movements. The dollar, on the contrary, despite the relatively good statistics, was losing its way. Preliminary data on US GDP for the third quarter came out much better than analysts' forecasts (+ 1.9% y / y with a forecast + 1.6% y / y), consumer spending also showed growth. Employment data from ADP (especially important in anticipation of tomorrow's data on NFP) also higher than expected (+ 125K with a forecast +110 K). Although we note that fact that USD paired with the Canadian dollar strengthened due to the decision of the Bank of Canada to leave the rate unchanged. Therefore the USDCAD provided an excellent opportunity for its sales, as we recommended in yesterday. It means that you can sell it today. The main event of yesterday, of course, was the announcement of the decision of the Federal Open Market Committee. The rate was cut by 0.25%. As a result, the dollar continued to suffer losses in the foreign exchange market. Our recommendation on the dollar remains unchanged - we are looking for points for its sales. Tomorrow we are waiting for the official statistics on the US labour market, which is likely to lead to the formation of a full downtrend. But we will talk about this tomorrow. The Bank of Japan: the rate is unchanged. The press conference of the Central Bank will take place after the publication of this review, so we’ll talk about its results tomorrow. In the meantime, we tend to buy the yen primarily against the dollar. Today we are waiting for the statistics on GDP growth in the Eurozone, data on personal income and expenditure in the United State to come out. Our recommendations for today: sale USDCAD, as well as the dollar as a whole in the foreign exchange market; buy gold and sale the Russian ruble.
Short
by Trade24Fx
Brexit postponed, last quiet day of the weekThe Brexit date is set to be delayed until 31 January Again. Johnson, as promised, asked parliamentarians to call early elections in December. He has failed to win on Brexit. Johnson said that he would make another attempt today and said that without early elections, it would not be possible to ratify the agreement with the EU. Today will be the last relatively calm day in the foreign exchange market, because on Wednesday the Fed and the Bank of Canada will announce their decisions, on Thursday we expect news from and the Bank of Japan, well, on Friday we are waiting for data on the US labour market to come out. So it will be an extremely interesting and volatile week. But we will talk about these events as they approach. And today we suggest focusing on trading using the stochastic oscillator. That is, we trade without obvious preferences according to the signals from hourly oscillators - we buy in the oversold zone and sell in the overbought zone. But at the same time, we do not try to impose our will on the market and fix our positions with relatively small stops. List of our current trading preferences as follows: selling the dollar, buying gold and the Japanese yen, selling the Russian ruble and buying oil on the intraday basis. -Some of the positions may change their direction, so new prospective options could be added. For example, purchases of the Canadian or Australian dollars against the US dollar. The only thing that keeps us from actively recommending the purchase of commodity currencies is their approach to important levels. The Canadian will have a chance to hit the key support on Wednesday when the results of the meetings of the Bank of Canada and the Fed will be announced. The Australian dollar may take advantage of the possible sale of the US dollar on Wednesday after the Fed’s decision and also gain a foothold above 0.6880.
Long
by Trade24Fx
Brexit & pound, IMF forecasts and Bank of Japan plansThe pound is a focus of attention of the forex market. Because Brexit is entering final straight. Yesterday the European Commission's chief negotiator Michel Barnier said that Brexit deal within reach in last-ditch talks, but doubts remain. And then there was information that the legally agreed text will be presented to the delegations of the EU and the UK no later than Wednesday morning. On the whole, we cannot but note the positive attitude of the parties, which only strengthens us in the desire to buy the pound. Recall, there is a potential pound value growth. UK labour market data released yesterday (came out pretty weak), once again showed that Brexit is only the pound traders are interested in. So we continue to pay attention to this issue. We still have time for pound purchases at affordable prices, but it is running out. IMF cuts global growth forecast. In 2019, global GDP growth is expected to reach 3% (this is 0.3% lower than the previous IMF forecast), and in 2020 the growth rate will be 3.4% (0.2% lower than the previous forecast). We note that the rate of economic growth in 2019 has been revised to the worst one since the financial crisis of 2008-2009. The IMF noted that the damage from trade wars is equal to the Swiss economy. In general, that is bad news for commodity and stock markets, as well as currencies such as the Canadian and Australian dollars. But good for safe-haven assets buyers. The US decided to hint to Turkey that a ground invasion against Kurdish people might not be the best idea. We are talking about US sanctions against Turkey, announced by Trump, as well as Volkswagen's decision to suspend the construction of an automobile plant in Turkey (price tag $ 1.4 billion). While no reaction from the financial markets to this has followed, we decided to leave our recommendations for the purchase of safe-haven assets (gold and the Japanese yen). So today we will continue to look for intraday long positions to open. Information that the Bank of Japan is preparing to reduce the volume of investments in bonds. The event is nontrivial. 10 years ago the Central Bank did that. We interpret this signal as monetary tightening. The yield increase in the Japanese bond market may well trigger a strengthening of the yen. In this light, our recommendation to buy the yen seems reasonable. Leading global analysts predict target 100 for the USD JPY.
Long
by Trade24Fx
Trump and Powell confrontation and current marketsLast week proved quite eventful for financial markets. More than we expected. The Federal Reserve cut its fed funds rate on Wednesday by 25 basis point to a range of 2% to 2.25%. Fed Chairman Jerome Powell said, “It's not the beginning of a long series of rate cuts,”. The current rate cut is a reaction of the Central Bank to an economic slowdown, and its further actions will depend on the state of the economy. The Fed also noted the trade war negative impact on the US economy. Trump shocked the markets in May by hiking tariffs to 25% from 10% on $200 billion in Chinese goods. China immediately retaliated and said a trade deal will not be reached unless the existing duties were stripped. In this light, the safe-haven assets are needed to be bought. As a result, Interactive chart of historical data showing the broad price-adjusted U.S. dollar index published by the Federal Reserve has shown its MAX since 2017. The Banks of Japan and England maintaining the existing structure of the financial system have decided not to change the existing status. A new round of the trade battle between the United States and China. “The U.S. will start, on September 1st, putting a small additional Tariff of 10% on the remaining 300 Billion Dollars of goods and products coming from China into our Country,” says Trump in a tweet. China quite naturally replied that it would respond adequately. Nothing foreshadowed trouble. On Monday, American delegates arrived in Shanghai. Although that did not bring any special results, the parties agreed to meet in September already in the United States. That is, it would seem, there is a certain process. And here Trump comes out with his statements. We have a small conspiracy theory about this. Pay attention! The time when Trump announced a new round of trade war is similar to the Fed’s decision the reaction and Powell’s comments as well, which led to a rise in the dollar price. Recall, Trump is extremely dissatisfied with the strong dollar, but, despite all his criticism of the Fed and Powell, the US Central Bank continues to bend its line, ignoring the requirements of the President. What Trump has to do if it is not possible to push through the idea of currency intervention, for now? He has only one tool of indirect influence - trade war. Its escalation will force the Fed to lower the rate further, which in turn will drive to a decline in the dollar value as a reaction to the cycle of depressions. Another important event last week was the publication of statistics on the US labor market. The NFP came out worse than forecasts, but on the whole, the value is sufficiently neutral (although we note that the June’s job report has revised down by more than 30K). Our position on the dollar remains unchanged - we recommend selling it. Escalating trade war increased the likelihood of several Fed rate cuts in 2019. Data on the NFP signal a slowdown in the US economy and Trump makes it unequivocally clear that he intends to “fight” a strong dollar. So the current week we declare a week of dollar sales. Besides, it makes sense to buy safe-haven assets. Remember, sell the Russian ruble and oil.
Long
by Trade24Fx
USDJPY Long Post FED major upside potential Powell's more hawkish than expected commentary after he announced a 25bps rate cut and indicated that there would be no further rate cuts going forward USDJPY jumped from 108.7 to 109.2. We expect the currency to keep rising in particular if the global economic growth is not weakening and there is no worsening in trade relations between the US and China as the YEN is seen as a safe haven asset. Therefore we are long USDJPY and see it heading towards 110 with key support at 108.9.
Long
by KQMarkets
The Fed, the Banks of Japan and EnglandAt the last meeting, the Governing Council of the European Central Bank (ECB) decided that the interest rate remain unchanged. Also, Mario Draghi said that officials had not discussed the rate cut. Accordingly, the euro has a good chance this week to rebound from the medium-term range lowest level. In this regard, our position on the euro - we buy primarily against the dollar. Boris Johnson Became U.K. Prime Minister, Replacing Theresa May. Markets are frankly afraid of Johnson because of his aggressive position on Brexit. As a result, the pound is under strong downward pressure. But again, it is so far underwater right now given that there are no real reasons for this - market expectations are based on fears and rumours, not facts. We believe that common sense will eventually win and bet on the pound growth. Therefore, we recommend its purchase. The data on the US GDP for the second quarter will be published today. GDP probably expanded 1.8% in the second quarter, down from 3.1%. If the growth is 2.2-2.5%, then the dollar, perhaps, is not in danger until Wednesday. But if 1.8%, it cannot avoid sales. This will be the main event not only of the week but of the summer. Wednesday may well lay the foundation for a dollar downtrend in upcoming months or even years. We are still waiting for the Central Banks of Japan and England meetings, as well as the Eurozone GDP outcome and the US labor market data to come out. In general, it will not be boring. Our trading recommendations for the week are as follows. We will continue to look for opportunities for selling the dollar across the entire spectrum of the foreign exchange market, buying the pound against the dollar as well as against the euro, selling oil and the Russian ruble, and also buying the Japanese yen against the dollar. As for gold, in the oversold we buy and in the overbought area we sell gold.
Long
by Trade24Fx