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USD/JPY shrugs after Japanese wages, household spending falterUSD/JPY is almost unchanged today, trading at 135.18. Japan's households are again holding tightly to the purse strings, as household spending fell 1.9% y/y in March, following a 1.6% gain in February. The consensus estimate stood at 0.4%. Household spending has been in a slump, with only one gain in the past five readings. There was no relief from wage data, as real wages declined in March for a twelfth straight month, at -2.9%. Nominal pay growth rose 0.8% y/y in March, but this fell well short of the CPI rate of 3.8% used to calculate real wages. In March, large companies negotiated substantial wage hikes, but so far this has not translated into higher wage growth, which could prod new Governor Ueda to normalize policy. Investors are hoping for some insights into Ueda's plans, with the release of the BoJ Summary of  Opinions on Wednesday. The summary covers the BoJ's April meeting, the first to be chaired by Ueda. At the meeting, the BoJ removed guidance on rate levels and said it would conduct a review of its policies. The Federal Reserve has warned that the turmoil in the banking sector has led to tighter credit conditions which could slow down growth in the US economy. These concerns were highlighted in the Fed's bi-annual financial stability report. The Fed's quarterly Senior Loan Officer Opinion Survey echoed these worries, with bank officials saying that they would tighten lending requirements and expressing concerns about a recession and deposit withdrawals. The financial stability report tried to put on a positive spin, stating, that "a large majority of banks" were able to handle the strain from higher rates and that US  banks were "well capitalised". Still, the Fed will have to keep in mind the danger of contagion and give thought to cutting rates later in the year in order to minimize the chances of a recession. USD/JPY is putting pressure on resistance at 135.37. Above, the next resistance line is 137.24 There is support at 134.50 and 132.97
by OANDA
Yen Step Back, Two Steps ForwardDespite sharp inflation, the Bank of Japan (BOJ) left YCC unchanged on March 10th. This was Haruhiko Kuroda’s last meeting as BOJ Governor. Japan is still struggling to stoke growth at risk of sustained stagflation. Hence, his decision to leave rates intact was no surprise. Kuroda left the YCC unchanged. Analysts expected him to scrap the YCC so that the new incoming governor, Kazuo Ueda could start afresh. Hopes of change are now expected at the next BOJ policy meeting on April 27th. Kuroda leaves behind a mixed legacy. His strong monetary stimulus lifted the Japanese economy out of deflation at the cost of hurting bank profits with ultra-low rates. Growth has remained tepid. Kuroda has been a source of stability. More than what was needed in the staid land of the rising sun. Now, the monetary policy landscape is expected to shift as Ueda takes charge. New BOJ leadership and an aggressive US Fed will create near term weakness in JPY followed by medium term strength. This case study analyses a two staged positioning in CME Japanese Yen Futures to harness yield from anticipated currency moves. Change of Guard at the BOJ Under the new governor, definitive shifts are afoot. Inflation in Japan is non-negative. Really? Yes. Not only non-negative but also at levels unseen in 43 years. Kuroda may not have radically transformed Japanese economy, but he managed to revive its equity market. The risk of uncertainty and volatility exists once he leaves the office. Markets are used to perennial Japanese low inflation, and to a consistent central bank leadership. Both are now going or gone. Another big shift is BOJ's more definitive independence. While separate from Government of Japan, BOJ was seen as being an integral part of Abenomics to snap out of deflation. The Kishida-Ueda relationship is different. Prime Minister Kishida has not outlined a particular direction on macroeconomic policy. Politically, the LDP is far from united, not least on fiscal and monetary policies. Kishida’s base of support within the party is fragile, and his approval ratings have been in a prolonged slump. As a BOJ governor, Ueda comes from an unconventional background. He is the first academic to assume leadership of BOJ. He has not managed a large organization. He is knowledgeable about monetary policy and is a protege of Stanley Fisher. What, then, can we expect from Ueda? He is not convinced that inflation is sticky. Ueda maintains that “…inflation is led by cost-push factors” and “it will still take time to achieve sustainable inflation.” It does hint that he isn't someone who will make any sudden major moves. That said, in a parliamentary hearing earlier this month, Ueda hinted that the current YCC was unlikely to survive. Engaging the market is essential he said before adding that “in some cases, adding a surprise factor is unavoidable.” There is growing evidence emerging from the annual “shunto” (a big wage negotiation between unions and employers) that workers are asking for the largest raise in base pay in 25 years. Some Japanese employers have already raised wages sharply higher with case in point being Fast Retailing (a Japanese listed firm and parent company of Uniqlo) which raised pay by 40% earlier this year. Until now, it has been possible to attribute Japan’s inflation to the rise in the cost of imports driven by weak yen. Big wage increases would change that. However, the latest data, published Tuesday, shows that wage growth is not rising as fast as expected. In cash terms, it reached the highest level in decades last year, but the January figure was far lower. Real wages adjusted for inflation have been falling the most since 2009. Balancing growth while keeping inflation under control is not a small feat. Next BOJ policy meeting is more than a month away. Meanwhile, the US Fed is becoming more hawkish in its fight against domestic inflation. Another rate hike by the US Fed will further weaken the fragile Yen. The US macro environment is making an already complicated situation even more difficult. The failure of Silicon Valley Bank along with closure of Signature Bank and Silvergate Bank is testing the Fed’s wit. US Inflation continues to remain hot and three times the Fed’s target. With the liquidity backstop in place, the Fed is likely to jack up its rate by another 25 basis points when it meets on March 22nd. CME’s FedWatch tool pegs the likelihood of that happening at 82% as of March 14th. Against that backdrop, Ueda could do one of the three once in office – (1) further widen the 10-year JGB interest rate band, (2) target shorter term yields & thereby reduce JGB holdings, and (3) abandon yield targeting altogether. Options Markets are Bullish JPY/USD Options on CME’s Japanese Yen futures have an overall Put/Call ratio of 0.56 across all expiries, indicating that investors are expecting the Yen to weaken. In sharp contrast though, options for the July contract show a deviation from the trend with a Put/Call ratio of 2.6x. This coincides with the release of the 2nd Outlook Report by the BOJ after Ueda takes over, indicating the market expectation on Yen’s reversal versus USD starting July. How much more JGB can BOJ keep buying to sustain YCC? Can this last? Last December, the BOJ tweaked its YCC policy, to allow the 10-year Japanese Government Bonds (JGB) yield to move 50 basis points (bps) on either side of its 0% target, wider than the previous 25 bps band. The move stunned markets as BOJ hinted at monetary tightening after having stuck to its ultra-loose policy stance for a long time. YCC tweak spilled over into January as BOJ was forced to purchase a record $182B of JGB to defend its higher yield cap from breaching the ceiling of 0.50%. The BOJ now holds more than 50% of JGB, making the situation ever more unsustainable. Adding to the JGB burden, BOJ also owns the majority of domestically listed exchange traded funds (ETFs). Besides massive JGB purchases, the BOJ remodeled in January a funds-supply operation into a tool to prevent yields from rising rapidly. Beyond the current short-term loans, the BOJ amended the rules to offer funds extending up to 10 years with variable rates. In January, BOJ provided loans of 3T Yen in the January offer before extending the terms of the loan to 10-year for subsequent loans. In February, BOJ tweaked the fund-supply policy terms, including the quadrupling of minimum lending fee from 0.25%-1%, to limit the short-selling of JGB’s, this indicates that the BOJ is having to use all tools at their disposal in order to defend JGB yields from rising above their defined cap. The BOJ defended yet another attack on the YCC again in February prompting a further $2.2B of JGB purchases to keep yields from breaching the ceiling. Economists anticipate that Ueda will fundamentally revisit YCC before BOJ lands in crisis. Ueda starts on April 9th. It is unlikely that he will make any radical moves instantly. Meanwhile, Fed Chair Powell is going all guns blazing to tame inflation down. Jobs data released last Friday showed the creation of 311,000 jobs smashing expectations of 225,000 jobs indicating a tight labor market. A strong labor market risks fueling a wage-inflation spiral, leaving the Fed with no choice but to jack up rates further. Two Stage Trade Setup to Gain from Near Term Weakness & Medium-Term Strength CME’s Japanese Yen Futures provides investors an exposure of 12.5 million Japanese Yen for every lot with the price quoted in USD per JPY increment. Every 0.0000005 change in JPY provides an increment of $6.25 in contract value. With the USD expected to strengthen in the near-term, JPY will weaken until the next policy meeting on April 27th. As such a short position using CME Japanese Yen futures expiring in June (6JM2023) would provide a reward-to-risk ratio of 0.6x. Stage 1 Entry: 0.0075390 Target Level: 0.0074550 Stop Level: 0.0076670 Profit at Target: $1,050 Loss at Stop: $1,725 Reward-to-Risk: 0.6x Stage 2 Thereafter, if Ueda starts to steer Japan’s monetary policy stance differently, JPY will start to strengthen in the medium term. Following from a short position in the near term, a subsequent long position in CME’s Japanese Yen futures will allow the investor to gain from the strengthening JPY. Entry: 0.0074550 Target Level: 0.0081445 Stop Level: 0.0072775 Profit at Target: $8,620 Loss at Stop: $2,220 Reward-to-Risk: 3.88x MARKET DATA CME Real-time Market Data helps identify trading set-ups and express market views better. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com DISCLAIMER Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services. This material has been published for general education and circulation only. It does not offer or solicit to buy or sell and does not address specific investment or risk management objectives, financial situation, or needs of any person. Advice should be sought from a financial advisor regarding the suitability of any investment or risk management product before investing or adopting any investment or hedging strategies. Past performance is not indicative of future performance. All examples used in this workshop are hypothetical and are used for explanation purposes only. Contents in this material is not investment advice and/or may or may not be the results of actual market experience. Mint Finance does not endorse or shall not be liable for the content of information provided by third parties. Use of and/or reliance on such information is entirely at the reader’s own risk. These materials are not intended for distribution to, or for use by or to be acted on by any person or entity located in any jurisdiction where such distribution, use or action would be contrary to applicable laws or regulations or would subject Mint Finance to any registration or licensing requirement.
CME:6JM2023Long
by mintdotfinance
2
Cheap Yen & Low P/E To Deliver Immense Bargains in NikkeiBuying financial assets in dips provides an inbuilt margin of safety. Enriching that trade is a currency that is hovering at its near lowest in a decade. Expected equity gains compounded with Yen that is anticipated to strengthen will strongly propel alpha from the proposed trade setup in Japanese equities. The P/E ratio based on next 12-months earnings in Japan is 13x and cheaper relative to 18x for the S&P500 and 27x for the Nasdaq. The Yen is near its lowest on average based on real-effective exchange rate. It is 2.3x standard deviations below the average over the last decade. For investors looking to hedge their yen exposure, its term structure delivers a positive basis (forward value minus spot price) that can be harvested through hedging. A long position in CME Nikkei/Yen Futures combined with a full currency hedge delivers a 1.9x reward to risk ratio with entry at 29065 and target of 31295 hedged by a stop at 27900. DEMYSTIFYING THE NIKKEI 225 INDEX (“NIKKEI”) The Nikkei index lists 225 largest Japanese firms. Given Japan’s heft, the index is an indicator of Asian market sentiments. The Japanese stock index was previously called Nikkei Dow Jones Stock Average from 1975 to 1985. The name was later changed to Nihon Keizai Shimbun or Japan Economic Newspaper which is commonly referred to as Nikkei. The Nikkei is a price-weighted index with an adjustment factor for each stock. The summation of the adjusted prices is divided by a divisor (29.508) to maintain index continuity. The 225 firms are spread across thirty-five industries. Top fifteen industries form 93% of the index. Top ten firms represent 38% of the Nikkei. Technology, Consumer Goods, Materials, and Capital Goods represent 95% of the index. JAPANESE EQUITIES HAVE BEEN RESILIENT THIS YEAR Japanese equities have delivered 13% gains so far this year with resilience across all sectors. Thanks to Apple and Microsoft, Nasdaq has returned 22% this year as investors seek shelter from ongoing crisis in US banking sector. “Stealth” QE partly explains the outsized gains in Nasdaq. In sharp contrast, S&P500 is up 9%, Dow is up 3%, Russell 2000 is up merely 1% while Chinese equities are down 3%. Positive performance in Nikkei is evident across all sectors and names. Broad based recovery in Japan makes Nikkei far more resilient relative to US equities where superior performance is restricted to no more than a dozen quality names. JAPANESE EQUITIES ARE PRIMED FOR GROWTH Japanese shares continue to inch higher with the Nikkei trading near its highest level in eight months led by earnings optimism and expanded government subsidies for chip production. The prospect of chip makers looks bright after Industry Minister Yasutoshi Nishimura said Japan plans to provide additional subsidies to chipmakers. The P/E based on next 12-months earnings in Japan is around ~13x and cheaper relative to ~18x in the US. For every dollar of earnings, only USD 13 is required to be invested in Nikkei compared to USD 18 in the S&P500 & USD 27 in Nasdaq. Japanese stocks not only trade on low P/E but pay healthy dividends. Nikkei has a yield of 2.13% compared to Dow Jones at 2.09%, S&P 500 at 1.67% and Nasdaq-100 at merely 0.86%. THE YEN IS EXPECTED TO REGAIN ITS HAVEN STATUS The yen is expected to regain its status as a haven currency after years of dollar dominance with the BOJ expected to normalise its monetary policy. The BOJ is anticipated to discard its yield-curve control policy in coming months and that should help strengthen the Yen. Barclays analysts expect the yen to appreciate to 123 per dollar by this time next year. The yen has faced headwinds from higher energy prices and a worsening rate differential as global central banks hiked rates to contain inflation. As energy prices ease and the rate hiking cycles pause, selling pressure on the Yen will soften. If the Fed stops raising rates after a final increase this week, that might lead to inflation-adjusted yield differentials to stop widening in favour of USD. Majority of forecasts have the yen strengthening to levels beyond that implied by the forward market. Analysts are one way on the direction of the dollar-yen. Japanese yen forecast for end-2023 was 125 as of last week, compared to FX forward rate at 129. Analysts at RBC fear that these crowded expectations underplay the impact of recession. US recession spreading to global markets could send the Yen plunging to 150 to the dollar as per RBC. COT REPORTS POINT TO BULLISH SENTIMENTS FOR JAPANESE EQUITIES The CFTC’s Commitment of Traders report (COT) shows positioning by professional investors in Nikkei futures. The report shows open interest segmented into four buckets, namely, (a) Asset Managers (pension funds, mutual funds, & institutional asset managers), (b) Leveraged Funds (hedge funds & money managers), (c) Other Reportables (traders using derivatives to hedge business risk), and (d) Non-Reportables (small speculators). Asset Managers have increased their net long positioning by 278% in Yen denominated futures. Leverage funds have reduced net shorts on Dollar-denominated futures. TRADE SET UP Low P/E ratios, Cheap Yen, Resurgence as a Haven, are among the drivers favouring the Nikkei. A long position in CME Nikkei/Yen Futures with currency fully hedged will deliver a 1.9x reward to risk ratio with entry at 29250 and target of 31295 hedged by a stop at 27900. Every tick represents five index points corresponding to a change of JPY 2,500 per lot. ● Entry: 29065 ● Target: 31295 ● Stop: 27900 ● Profit at target: JPY 1,115,000 ● Loss at stop: JPY 582,500 ● FX hedging gains with CME Micro USD/JPY Futures (Dec 23 contract): JPY 37,200 ● Reward-to-risk: 1.9x MARKET DATA CME Real-time Market Data helps identify trading set-ups and express market views better. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com DISCLAIMER This case study is for educational purposes only and does not constitute investment recommendations or advice. Nor are they used to promote any specific products, or services. Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. Please read the FULL DISCLAIMER the link to which is provided in our profile description.
CME:NIYM2023Long
by mintdotfinance
1
USD/JPY Surges to 135.00 as BOJ Maintains Dovish PolicyThe USD/JPY pair has surged to near the crucial resistance of 135.00 after the Bank of Japan (BoJ) announced a continuation of ultra-loose monetary policy and stability in Japanese Government Bonds’ (JGBs) yields band to maintain an expansionary policy stance. BoJ Governor Kazuo Ueda has confirmed that the central bank will take additional easing steps without hesitation as needed while striving for market stability. TRADE IDEA DETAILS Currency Pair: USD/JPY Current Trend: ↗️Bullish Trade Signal: ↗️Buy 👉 Entry Price: Above 135.37 ✅ Take Profit: 137.00, 137.91 ❌ Stop Loss: Below 134.00 Additionally, the USD Index has jumped above 101.76 due to the delay in the US debt-ceiling proposal and pre-Federal Reserve (Fed) policy anxiety among investors. The recovery in appeal for US equities, led by strong quarterly performances by technology companies, has contributed to the recovery of the majority of losses generated in the Asian session, as portrayed by S&P500 futures. #USDJPY #ForexTrading #BankOfJapan #MonetaryPolicy #AscendingTriangle
Long
by RichDadph-FX
USD/JPY - Yen eyes Tokyo CPI, US GDPUSD/JPY is trading quietly at 133.84, up 0.13% on the day. The yen's lack of movement could change today with a host of key releases. Japan will release Tokyo Core CPI, while the US publishes Preliminary GDP for the first quarter and unemployment claims. Japan releases Tokyo Core CPI for April early on Friday, which is expected to remain steady at 3.2%. Will BoJ meeting bring more of the same? Japan's inflation is running around 3%, a dream for most central banks but a headache for the Bank of Japan. There has been pressure on the BoJ to tighten policy as inflation remains above the target of 2%. Japan has experienced decades of deflation and the massive stimulus programme was meant to stimulate the economy. Inflation has moved higher, but former BoJ Governor Kuroda insisted that the central bank would not consider tightening until it was convinced that inflation was sustainable, which required stronger wage growth. New BoJ Governor Ueda has toed the party line so far, but left open the possibility of tightening if wage growth and inflation climb faster than expected. All signs point to the BoJ maintaining its policy settings when it wraps up its 2-day meeting on Friday, but the central bank has surprised the markets in a big way before, and the markets will be following the meeting closely. In the US, unemployment claims have moved higher for four straight weeks and come in above the estimate each time. The upward trend is expected to continue, with claims expected to rise to 248,000, up from 245,000. The labor market remains strong, but the upswing could signal cracks in what has been a robust US labour market. Preliminary GDP for the fourth quarter is expected to drop to 2.0% y/y, down from 2.6% in Q4. USD/JPY tested support at 133.41 earlier in the day. The next support line is 132.69 134.27 and 134.99 are the next resistance lines
by OANDA
USD/JPY extends rally ahead of BOJ Core CPIThis week's data calendar out of Japan will be dominated by inflation releases and the Bank of Japan's two-day meeting at the end of the week. Traders will be keeping a close eye on BoJ Core CPI, which will be released on Tuesday. The index, which is the BoJ's preferred inflation gauge, fell from 3.1% to 2.7% in February. Another drop would support the central bank's view that inflation is falling back towards the 2% target. Inflation has been running above 3% and this has raised speculation that the BoJ will respond by tightening policy, which would likely send the yen sharply higher. The BoJ has insisted that it will not tighten until it is convinced that higher inflation is sustainable and not a result of more expensive goods and raw materials. The uncertain outlook for global growth and a weak domestic economy means that the BoJ is in no rush to shift policy. New Governor Ueda has been consistent in his message that he will maintain an ultra-loose policy, but nonetheless, speculation continues that the BoJ will tweak or even abandon its yield curve control, which has been criticised for distorting bond market pricing. I suspect that speculators hoping for a shift in policy that will send the yen higher will be disappointed after this week's meeting, as Ueda is unlikely to rock the boat at his first meeting. The BoJ will provide updated quarterly growth and inflation forecasts, which could provide a hint as to future monetary policy. USD/JPY is testing resistance at 1.3427. Next, there is resistance at 1.3499 133.41 and 1.3269 are providing support
by OANDA
Traders are waiting for the BoJ Monetary Policy on Friday!USD/JPY experienced a rally up to 135.13 last week but then retreated during the dollar softening. At the start of this week, the initial bias is neutral in the 4-hour chart since the market is waiting for the BoJ interest rate decision that will be released on Friday. Therefore, technically, a further rise is expected if the support level of 132.01 can be held. On the upside, if 135.13 is broken, the rebound will continue from 129.62 to the next resistance level of 135.73. Conversely, the support of 132.01 was broken; it may go further down to 131.61.
by ATFX_Global
Can the USDJPY get the trend back in play?Today's focus USDJPY Daily Chart Pattern Support hold/trend continuation Possible targets – 134.95 – 137.35 Support -133.90 – 133.70 Resistance –134.70 – 134.95 Indicator support – Price above MA with upslope CCI above 0 line Will today's push higher turn into something more on the USDJPY? Buyers so far have set the tone with a 0.42% rally to today's high. Some selling has taken hold in the last hour, but if buyers can hold the move, we are looking for a new move to test resistance, and if that area can be beaten, we could see a new move to 137.35 if a new trend continuation is confirmed. Support remains at 133.90. If sellers cut down today's move and break support, then this idea is nullified for now! We need to see support hold and preferably a solid finish on today's candle. The BOJ meets this Friday, and questions remain about policy regarding bond yields. Keep an eye on this, as we have seen some volatile meetings previously. Will we finally see a break of resistance after last week's latest hold? Thanks for stopping by. Good trading, and have a great day.
Long
by Eightcap
What Happens When the BoJ Kills its Yield Curve Control?Yield Curve Control (YCC) has kept interest rates on ten-year Japanese government bonds within a narrow range close to zero percent since 2016. The Bank of Japan (BOJ) employs YCC to target short-term interest rates at -0.1% and to maintain the 10-year government bond yield within 0.5% above or below zero. In 2016, Japan was grappling with over a decade of sluggish growth and the issue of deflation, where prices of goods decline. To avoid purchasing huge amounts of the bond market, Yield Curve Control (YCC) was introduced to maintain interest rates at their existing levels. But now, Japanese annual inflation has reached 3.3% as of February, which suggests that Yield Curve Control (YCC) may no longer be needed. The Bank of Japan (BoJ) has faced criticism for distorting markets with the YCC while inflation has exceeded its 2% target. As a result, the BoJ is considering phasing out YCC, which could have significant consequences for US and Japanese bonds and the USD/JPY exchange rate. So, what will happen when the Boj decides to Kill its YCC? Japanese investors have been disappointed for the past seven years in the returns on domestic bonds since interest rates have been fixed close to zero. This has prompted many to consider investing in US bonds which have become highly appealing, resulting in trillions of Yen being invested in them. A relaxation of the YCC by the Bank of Japan on the 10-year rate could potentially make Japanese government bonds more appealing to domestic investors. This could result in a significant amount of money repatriating to Japan and have a major impact on global markets. There are two potential outcomes if Japanese investors repatriate their funds and invest more in Japanese bonds. Firstly, the interest rates for US bonds may increase, leading to tighter financial conditions and a slowdown in US economic activity. Secondly, there may be a weakening of the US dollar, especially the USD/JPY, as investors sell their USD to buy JPY for repatriation. The USD/JPY is currently in the range bound between around 138.00 and 129.500. But a downside potential to a level like 116.00, which has not seen since early 2022 if a knee-jerk reaction eventuates. Ultimately, how drastic these outcomes turn out will depend on the selling pressure and timing of Japanese investors in reaction to a relaxation of the YCC. But how likely is it that the BoJ will loosen its control of the yield curve? Japan's new central bank Governor, Kazuo Ueda, has suggested that the policies of his dovish predecessor, Haruhiko Kuroda, will eventually be phased out. However, the BOJ is likely to avoid changing its policies until it is certain that inflation will reach and maintain its 2% target. Next week, On April 27-28, Ueda will preside over his first BOJ policy meeting, during which the board will release new quarterly growth and inflation forecasts that will be scrutinized for indications of how soon the central bank anticipates inflation will reach its target sustainably. Speaking last week, on April 10th, Ueda emphasized the need for the BOJ to make proactive decisions regarding the timing of policy normalization. He warned that delaying the adjustment could lead to disruptive consequences.
by BlackBull_Markets
USDJPY Outlook 13 April 2023The USDJPY trades along the 133 support level and could see further downside as the DXY continues to weaken. However with the continual divergence in monetary policy between the US Federal Reserve and the BoJ, a rebound to the upside is likely to always be on the cards. If the USDJPY breaks strongly below 133 (and more crucially below 132.70) the price could trade down to 132. Looking for a possible test and rebound from the 132 round number support level
Short
by JinDao_Tai
USDJPY Outlook 11 April 2023With the overnight strength of the DXY, the USDJPY climbed steadily to the upside, as the price approached the 134 round number resistance area. Weakness in the Japanese Yen was also compounded by the statement from the new BoJ Governor Ueda, indicating that large scale monetary easing policy will continue. This was in contrary to the market anticipation that Governor Ueda could trim back on easing. While the USDJPY retraces from the resistance level, look for the price to bounce from either the 23.60% fib level which is also the 133 round number level, or more likely at the 132.60 price level which is the 38.20% fib level and the upward trendline providing support. Further upside on the USDJPY could see the price climb steadily toward the 135 key resistance level.
Long
by JinDao_Tai
USD/JPY - Yen slides as Ueda says no plans for policy shiftBank of Japan Governor Ueda spoke at his first news conference as head of the central bank today. It wasn't quite a State of the Union address, but Ueda's message was clear - the current monetary policy was appropriate and he had no plans to make any major shifts. There has been strong speculation that Ueda will make some significant moves, perhaps not right away but in the next few months. After years of battling deflation, Japan is facing inflation which has risen above the BoJ's 2% target. The US/Japan rate differential has been widening as the Fed continues to raise rates while the BoJ has capped yields on 10-year government bonds and interest rates remain negative. The changing of the guard at the BoJ seemed to some as an opportunity for BOJ policy makers to take some steps toward normalization, such as tweaking or even removing yield curve control. Ueda poured cold water on this sentiment, stating that, “Right now, the yield curve control is considered most appropriate for the economy while tending to market functionality”. Ueda's message of "stay tuned for more of the same" has lowered expectations of a policy shift at the April 28th meeting and the yen has responded with sharp losses. Japan's consumer confidence gave policy makers something to cheer about, rising to 33.9 in March, vs. 33.1 prior and 30.9 anticipated. This was the highest level since May 2022, although consumer confidence remains deep in negative territory, below the 50-level which separates contraction from expansion. The week ended with a solid US employment report. The economy added 236,000 jobs last month, within expectations and softer than the upwardly revised 326,000 reading in February. The labour market is cooling but has been surprisingly resilient to relentless rate hikes and the odds of a 25-bp rate hike have increased to 68% according to the CME Group, compared to around 50% prior to the employment report release. There is resistance at 133.74 and 135.31 132.18 and 131.67 are providing support
by OANDA
The end of an era.This week, the Bank of Japan governor’s Kuroda’s decade long term comes to an end. As such we would like to take some time to review what this means for the Yen and in particular, the AUDJPY. Firstly, central bank timings. In case you missed it, last Tuesday the Reserve Bank of Australia (RBA) snapped its consecutive 10 rate hikes, being the second major central bank in developed markets to pause after the Bank of Canada. On the other hand, the Bank of Japan’s (BOJ) inaction thus far, is in stark contrast to the rest of the world. Kuroda officially ends his second 5-year term. With the new Governor Ueda at the helm, we think a move away from the current policy stance is very likely for BOJ as inflation remains uncharacteristically high for Japan and unemployment still relatively contained. A shift in the BOJ’s policies could mean the end of the largely debatable Yield Curve Control (YCC) policies, either in the form of abandonment or yet another change to the policy band or target yield as it repeatedly trades close to the upper limit of the currently allowed range. In fact, the OIS Implied rates for the 10-year Japanese gov yields show a huge disparity from the BOJ’s policy ceiling of 0.5%. While it has corrected from the high, it still trades north of the 0.5% cap by a clear margin, indicating market participants’ expectations that the yield cap is likely to be abandoned or shifted higher again. Coincidentally, the BOJ can take a page out of the RBA’s book, where RBA faced an almost identical situation, when in 2021 it was forced to abandon its three-year yield target. Once it lost control, yield quickly shot up there after. If or when the BOJ lose control of its YCC program, this warrants a peek into what might happen to Japanese Yields. Market expectations of forward rates are completely opposite for these two countries, with participants expecting the RBA to execute multiple rates cut through 2023, while Japan is expected to hike rates. So what does this mean for the currency pair? Well one way to look at this is the real yield differential between Japan (JP) and Australia (AU). When the AU – JP yield differential collapses, the AUDJPY tends to follow suit. If RBA is to hold rates, while the BOJ is to raise, we could see this yield differential collapse from here, paving the path for the next downward move in the currency pair. On the technical front, the AUDJPY is trading near its upper resistance of a four decade long descending triangle. On a daily timeframe, although the pair's first attempt to break below the 88 handle was short-lived, it now sits just above this support, which could lead to a second coming. Of course, such a trade might take a while to play out given the decade long chart pattern as well as fundamental factors such as central banks’ policy shifts. Looking ahead, the next potential catalyst could be the Bank of Japan’s first meeting under a new leadership on the 27/28th of April, while the RBA’s next meeting is scheduled for 2nd of May. To express this view, one option is to use the CME AUDJPY currency pair, which allows you to short the currency pair directly. Alternatively, if liquidity and contract size are of concern, the same view can be expressed by selling one Micro USDJPY Futures and buying two Micro AUDUSD Futures to construct a synthetic AUDJPY pair. Setting up the AUDJPY currency pair this way allows a more palatable trade as the notional amount is on roughly 20,000 AUD or 10,000 USD. This synthetic set-up allows us to access a more liquid market in both contracts compared with the full sized one. Using the descending triangle structure as a guide, we set our stops at 94, close to the previous resistance and our take profit at 70. The charts above were generated using CME’s Real-Time data available on TradingView. Inspirante Trading Solutions is subscribed to both TradingView Premium and CME Real-time Market Data which allows us to identify trading set-ups in real-time and express our market opinions. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com Disclaimer: The contents in this Idea are intended for information purpose only and do not constitute investment recommendation or advice. Nor are they used to promote any specific products or services. They serve as an integral part of a case study to demonstrate fundamental concepts in risk management under given market scenarios. A full version of the disclaimer is available in our profile description. Reference: www.cmegroup.com www.cmegroup.com
Short
by inspirante
USD/JPY jumps after solid nonfarm payrolls releaseUSD/JPY has posted gains in the North American session after a solid showing from US nonfarm payrolls. Japan's real wages continued to fall, while household spending rebounded. In the North American session, USD/JPY is trading at 132.24, up 0.36% on the day. In the US, nonfarm payrolls was within expectations, easing concerns that the US labour market is in trouble. The economy added 236,000 in March, close to the market consensus of 240,000. This was a solid reading, although weaker than the February reading of 311,000. The US dollar posted gains against the majors after the release, after concerns that a soft reading might force the Fed to take a pause in its rate hikes. Japan's real wages fell in February for the 11th straight month, falling by 2.6%. Household purchasing power continues to drop, but this was an improvement over the -4.6% release in January, as government energy subsidies helped curb inflation. Household spending rose 1.6% in February, rebounding from -0.3% in January but well off the market consensus of 4.3%. The Bank of Japan doesn't meet until April 28th, but Governor Ueda will be under the magnifying glass, as he chairs his first meeting at the helm of the central bank. The economy is showing signs of improvement, with retail sales and industrial production accelerating in February. Inflation remains very low compared to other major economies but is still high for Japan. In February, CPI fell to 3.3%, down from 4.3% in January but above the BoJ target of 2%. There has been considerable speculation that Ueda could shift policy and tweak or even abandon the Bank's yield curve control policy. This move could have huge significance for the yen - when the BoJ widened the yield target band in December, the yen posted sharp gains. Ueda hasn't revealed any cards about what he might do at his first meeting. He has toed the line of the previous Governor, Haruhiko Kuroda, that the BoJ won't tighten until inflation is sustainable, and that would require higher wage growth. Wage growth has been falling, so any tightening moves such as raising interest rates do not appear imminent. USD/JPY is testing resistance at 132.27. Above, there is resistance at 133.45 130.94 and 129.09 are providing support
by OANDA
USD/JPY steadies after taking a tumble, Tokyo Core CPI loomsUSD/JPY is posted gains on Thursday after dropping sharply a day earlier. In the North American session, USD/JPY is trading at 132.45, down 0.31%. Later today, we'll get a look at Tokyo Core CPI, a key inflation measure. Wednesday was a day to forget for the Japanese yen, which lost 1.5% against the US dollar. USD/JPY touched a high of 132.89, its highest level in a week. The US dollar was broadly higher on Wednesday and a rise in US yields helped propel USD/JPY to even higher levels. US 10-yr and 2-yr Treasury yields both hit weekly highs, and the widening of the US/Japan rate differential is weighing on the yen. The banking crisis has eased somewhat, with no spreading of contagion since the stunning collapse of four US banks and Credit Suisse earlier this month. The markets are calmer, risk appetite has improved, and investors have moved away from the safe-haven yen in favour of riskier assets. Japanese inflation indicators have been pointing downwards and the markets will be keeping a keen eye on the March Tokyo Core CPI release later today. The February release showed a sharp drop in inflation, from 4.4% to 3.4%, but the decline was not all that surprising, as government energy subsidies kicked in last month and dampened inflation. Other core CPI indicators also eased in February. The March Tokyo Core CPI is expected to continue falling, with an estimate of 3.1%. Japanese inflation releases are closely watched, as higher inflation could force the Bank of Japan to pivot its ultra-loose policy. The central bank has insisted that the high inflation is transient and it expects inflation to fall to 2% later this year. The BoJ has said it would consider tightening policy only if there is evidence that inflation is sustainable, such as stronger wage growth. Japan's labour unions won substantial wage hikes earlier this month, and time will tell if wage growth kick-starts the weak economy and leads to higher inflation, which could force the BoJ, under new management, to reassess its easy monetary policy. USD/JPY is testing support at 132.60. Below, there is support at 131.12 133.75 and 134.48 are the next resistance lines
by OANDA
CHFJPY Breakout and potential retraceHey Traders, CHFJPY was trading in an uptrend and then massively managed to break it out due to JPY strength. one of the reason of the Yen strength is the major changes in monetary policy that are expected from BoJ since it didn't changed the monetary policy from a long time since now. and considering that also JPY is considered a safe haven in this type of environment we still expect further strength. Technically we have noticed a breakout of the uptrend so i will be monitoring a potential retrace of the trend around 145 support and resistance zone. Feel free to ask any question in the comment section. Trade safe, Joe.
Short
by JoeChampion
4
USD/JPY - yen slips after BoJ maintains policy settings The Japanese yen is trading at 1.36.83 in the European session, down 0.52%. USD/JPY fell 0.90% on Thursday but has recovered much of those losses today. Bank of Japan Governor Kuroda didn't fire any final shots at his final meeting today. The BoJ maintained interest rates at -0.1%, where they have been pegged since 2016, and didn't make any changes to its to yield curve control (YCC) policy. Traditionally, BoJ governors do not make waves at their final meeting, but there was an outside chance that Kuroda might buck the trend. Kuroda has surprised the markets in the past, most notably when he widened the yield curve band in December and jolted the markets. This time, Kuroda stayed on the sidelines and the yen responded with losses as some investors were disappointed that he didn't tweak the YCC. Kazuo Ueda takes over as BoJ Governor next month, and there is growing speculation that Ueda will change forward guidance and tweak or even abandon YCC, as distortions in the yield curve are damaging the bond markets. Ueda may not press the trigger when he chairs his first meeting in April but is expected to shift policy in the coming months. The US releases its February employment report, highlighted by nonfarm payrolls, later today. The blowout January reading of 517,000 is widely seen as a blip, although the labour market remains surprisingly resilient, despite the bite of rising interest rates. The estimate for February stands at 205,000 and a wide miss of this figure on either side will likely shake up the US dollar.  A weak reading would fuel speculation of a Fed pivot and likely weigh on the US dollar, while a strong figure would support the Fed's hawkish stance and should be bullish for the greenback. The Fed will also be keeping a close eye on wage growth, in addition to nonfarm payrolls. Average hourly earnings are expected to rise to 4.7% y/y in February, up from 4.4% y/y in January. Higher wages drive inflation higher and an acceleration in wage growth would complicate the Fed's battle to curb inflation. 136.06 is under pressure in support. 13502 is next 136.86 and 1.37.90 are the next resistance lines
by OANDA
USDJPY Outlook 10th March 2023The Bank of Japan (BoJ) released an unchanged monetary policy statement, with no surprises from Governor Kuroda at his last policy meeting. As the monetary policy statement was unchanged, this disappointed the market slightly, resulting in the significant weakening of the Japanese Yen. The USDJPY spiked up from the 136 price area, breaking above the 23.60% Fibonacci retracement level at 136.40 to reach the 137 round number resistance and 61.8% Fibonacci retracement level following the release of the news. Although the price retraced lower, the USDJPY could continue trading higher toward the 137 resistance level and beyond that, the next key resistance level is at 138.
Long
by JinDao_Tai
USDJPY Outlook 9th March 2023Although the USDJPY traded significantly higher following the bullish news from the US Federal Reserve, with the price reaching the 138-round number resistance level, it has since retraced significantly to the downside and is trading below the 137-round number level. With the short term bearish trendline indicating downward pressure, look for the USDJPY to continue trading lower to retest the 136.40 (and 61.8% Fibonacci retracement level), similar to the price action overnight. However, watchout for significant price volatility tomorrow with the Bank of Japan (BoJ) due to release its monetary policy decision (and it is also Governor Kuroda's last meeting). While it is unlikely that any changes will be made to the monetary policy, the market is anticipating the potential of a surprise since it is Kuroda's last meeting. If he adjusts/removes limits on the JGB yield, the Yen could strengthen significantly, with the next key support level for the USDJPY at 135.26.
Short
by JinDao_Tai
USDJPY Outlook 6th March 2023The USDJPY reversed strongly from the 137 round number resistance level, trading lower through the session on Friday, ending the week at the 135.80 price area. This move lower, as we know was due to the weakness in the DXY, hence, if the weakness continues, the USDJPY could continue trading lower, down to retest the 135.35 key support level. The USDJPY could see significant volatility this week, given that the JGB 10yr yield had recently breached the 0.5% ceiling and the BoJ monetary policy statement is due to be released (and it is Kuroda's last meeting as Governor). If the price breaks below the immediate support level, the USDJPY could see significant downside potential, with the next key support level at the round number level of 134.
Short
by JinDao_Tai
2
Key news events for the weekIt might be a big week head for the markets. Monday CHF CPI data release. The inflation gauge for the Swiss is expected to be lower than previous, signaling a slowdown in inflation growth. Could result in some weakness in the CHF if markets anticipate no more rate hikes to come from the SNB. Tuesday Reserve Bank of Australia (RBA) interest rate decision. Another 25bps rate hike to come? However, the AUDUSD has often traded lower following the release of the news. Could the same thing happen again? Fed Chair Powell testifies during the US session. This could lead to increased volatility on the DXY, but watch what Powell says! Pivot? Or continue with the rate increases? Wednesday Bank of Canada (BoC) is set to hold rates at 4.50%. Unlikely that we'll see a surprise given how recent Canadian CPI has been released lower than previous (signaling a possible reversal in inflation). Friday Bank of Japan (BoJ) is set to announce its monetary policy decision. This is Kuroda's last monetary policy meeting as Governor. While a surprise is unlikely, he might lay the foundations for his predecessor. Expect significant volatility on the Japanese Yen. Since it is the first Friday of the month, look out for the release of the US Non-Farm Employment Change (NFP). The data shouldn't surprise like the previous month, however, some stability in the employment data could see markets reconsider the FOMC's stance on further rate hikes, leading the DXY to trade lower. Whatever the news, watch out for my daily posts on the specific currency pairs as I update you on possible setups and price levels. Also, tune in to the Daily Live Stream at 3pm (GMT+8)!
TVC:DXY
by JinDao_Tai
4