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FED FOMC RATE DECISION HIGHLIGHTS - DXY/ USDJPY SHORTSAs expected the fed decided NOT to change the fed funds rate or discount rate. We could/ shoud see some USD flushing of fed funds for september to the downside I stick with my 99.5 to 100 for USDJPY shorts as attached. Attention now turns to Yellens speech in 30mins - deeper analysis to come then. FOMC Rate Decision: Fed Leaves Policy Rate Unchanged, Says Case For Rate Increase Has Strengthened Fed Sees Lower Rate Path in 2016, 2017, 2018 and Longer Run Fed Sees One Interest Rate Increase in 2016, Two in 2017, Three in 2018, 2019 D Three Fed Officials See No Rate Increase in 2016, Up From Zero in June Fed: Decided To Wait 'For The Time Being' For More Progress Toward Goals Fed Officials See Fed Funds Rate at a Median of 1.125% at End of 2017 Fed: Market-Based Inflation Compensation Measures Remain Low Just Four Fed Officials See More Than One Rate Increase in 2016 DJ News Fed: Expects Moderate Pace of Economic Growth, Labor Market To 'Strengthen Somewhat Further' Fed Officials See Fed Funds Rate at a Median of 0.625% at End of 2016 Fed: Near-Term Risks To Economic Outlook Appear Roughly Balanced Cleveland Fed's Mester, Kansas City Fed's George, Boston Fed's Rosengren Dissent On Fed Policy Action George, Mester, Rosengren Preferred To Raise Fed Funds Rate To 0.5% To 0.75% Fed Continues To Closely Monitor Global Economic, Financial Developments Fed Continues To Closely Monitor Inflation Indicators Fed: Economic Growth Has Picked Up From Modest Pace in First Half Fed: Market-Based Inflation Compensation Measures Remain Low Fed Officials See Fed Funds Rate at a Median of 1.125% at End of 2017 Fed: Survey-Based Inflation Expectations Measures 'Little Changed' Fed Officials See Fed Funds Rate at a Median of 1.875% at End of 2018 Fed Officials See Fed Funds Rate at a Median of 2.625% at End of 2019 Fed: Inflation Continued To Run Below 2% Target Fed Officials See Fed Funds Rate at a Median of 2.900% in Longer Run Fed Officials See Slightly Lower GDP in 2016, Unchanged in 2017, 2018 Fed: Inflation Expected To Rise To 2% Over Medium Term As Transitory Effects Fade Fed Median GDP Projections: 1.8% in 2016, 2.0% in 2017, 2018, 1.8% in 2019 Fed Officials See Unemployment Rate Higher in 2016, Unchanged in 2017, Lower in 2018 Fed: Labor Market Continued To Strengthen Fed Median Unemployment Projections: 4.8% in 2016, 4.6% in 2017, 4.5% in 2018, 4.6% in 2019 Fed: Job Gains Have Been Solid in Recent Months, Unemployment Rate Little Changed Fed: Household Spending Has Been Growing Strongly DJ News 2016.09.21 20:00:00 Fed Median Longer-Run Unemployment Projection: 4.8%, Unchanged From June Fed: Business Fixed Investment Remained Soft Fed Officials See Lower Inflation in 2016, Unchanged in 2017, 2018 Fed Median Inflation Projections: 1.3% in 2016, 1.9% in 2017, 2.0% in 2018, 2019 Fed Median Longer-Run Inflation Projection: 2.0%, Unchanged From June Fed Leaves Discount Rate Unchanged At 1.00% Fed Median Core Inflation Projections: 1.7% in 2016, 1.8% in 2017, 2.0% in 2018, 2.0% in 2019
Short
by QuantumLogicTrading
3
EURJPY: Interesting triangle spottedWe have a good opportunity on the long side here, brewing behind the scenes. We are looking for bears to lose steam, and the pair to slow down, to go long on strength. This decrease of the ATR values shows momentum's waning, meaning that the market has been one sided for a while (in this case, the last leg of selling slowing down). We can follow the 'path of least resistance' which is indicated by RgMov, which in this case, gives us a bullish outlook as more favorable. Failure to hit 113.253 by the close of the 21st will confirm that the bears are losing steam, further validating this trade idea. We can either take a new daily high as long entry, risking a drop to the recent lowest low after today's close, or we can wait for the timer to expire and bears to fail reach the target to enter longs on strength. Keep an eye on the BOJ this week, the move out of this triangle will be quite sizeable. Good luck, Ivan Labrie.
Long
by IvanLabrie
USDJPY - EDGY BOJ TURNS YEN TURBULENT; KURODA SPEECH *USDJPY: 1. Price action immediately following BOJ this september was more than erratic but at the same time showed some consistency for those of you who can remember back to Julys performance - we moved instantly lower on the decision to 101 flat, before ripping 180pips higher to 102.8 to then lose most of the bids and trade back to the 101 base. 2. The BOJ decision itself, imo, was less than clear compared to July though and almost warranted this kind of whipsaw behaviour - especially given the anticipation (or not so much) of the Fed later today which is likely to mingle with risk sentiment and dollar leg of USDJPY the like at some point. - The unclearness regarding whether the policy decision was net hawkish or dovish was given that there was no changes to the main policy tools (Depo, LSP, JGB, ETF), it would leave one thinking neutral-hawkish on expecttions - especially given a 5bps cut was the median BBG forecast. However, on the other hand, you had statements from BOJ including, "BOJ expanding its monetary base until it reaches its 2% inflation target" which is somewhat dovish given it puts never ending monthly JGB 80-100trn yen on the table for the next few years (unless the BOJ is delusional that less time is required). But at the same time this dovish statement was met by a bid from the BOJ to "increase yields for 10y JGB to 0%" and steepen the curve - which in itself is highly contradiction of ANY further expansion to the monetary base (given increases in money supply reduces rates). The BOJ knowing this then went on to cover saying "pace of purchases may fluctuate as to meet 0% target". Thus all in all the above, for me at least, left the overall decision uncertain at best. Given we are only 0.2% down it would be fair to say the outcome was infact neutral. Neutral BOJ and No hike Hawkish Fed was my prediction before (see attached) and i stand behind the 100 level being reached as USD demand is likely to be flushed at some level when the 10-20% priced into USD fed funds is flushed out. BOJ Decision: JAPAN BOJ RATE DECISION STAYS FLAT AT -0.1 % (FCAST -0.1 %) VS PREV -0.1 % BOJ DECIDES TO SET TARGET FOR LONG TERM INTEREST RATES JAPAN BOJ BASE MONEY TARGET STAYS FLAT AT 80 TLN JPY (FCAST 80.00 TLN JPY) VS PREV 80.00 TLN JPY BOJ: ADOPTS QQE WITH YIELD CURVE CONTROL BOJ: TO ABANDON MONETARY BASE TARGET BOJ SAYS NO OFFICIAL BASE MONEY TARGET, BUT MAINTAINS ANNUAL PACE OF JGB BUYING AT 80 TRLN YEN BOJ: TO KEEP BUYING JGBS SO BALANCE OF ITS HOLDINGS INCREASES AT ANNUAL PACE OF 80 TRLN YEN BOJ: INTRODUCES NEW MARKET OPS FOR YIELD CURVE CONTROL BOJ: TO BUY JGBS SO 10 YR YIELD HOVERS AROUND 0 PCT BOJ: PURCHASING YIELDS WILL BE SET PER AUCTION BY INDICATING THE SPREAD FROM THE BENCHMARK YIELD WHICH BOJ DETERMINES SEPARATELY BOJ: DEPENDING ON MARKET CONDITIONS MAY SET JGB PURCHASE SIZE PER AUCTION TO FIXED AMOUNT OR UNLIMITED AMOUNT BOJ: SCRAPS RANGE FOR DURATION OF JGBS THAT BOJ BUYS BOJ: BOJ TO CONTINUE EXPANDING MONETARY BASE UNTIL CPI EXCEEDS 2 PCT AND STAYS ABOVE TARGET IN STABLE MANNER BOJ: ADOPTS COMMITMENT TO LET INFLATION OVERSHOOT ABOVE 2 PCT BOJ: BOJ CAN CUT SHORT TERM POLICY RATE, TARGET LEVEL OF LONG TERM RATES IN FUTURE EASING BOJ: BOJ TO CONTINUE EXPANDING MONETARY BASE UNTIL CPI EXCEEDS 2 PCT AND STAYS ABOVE TARGET IN STABLE MANNER BOJ: BOJ MAY ACCELERATE EXPANSION OF MONETARY BASE AS FUTURE POLICY OPTION BOJ: PACE OF MONETARY BASE INCREASE MAY FLUCTUATE IN SHORT RUN UNDER MARKET OP THAT AIMS TO CONTROL YIELD CURVE BOJ: MAINTAINS COMMITMENT TO ACHIEVE 2 PCT INFLATION AT EARLIEST DATE POSSIBLE BOJ Kuroda:
Short
by QuantumLogicTrading
1
USDJPY - EDGY BOJ TURNS YEN TURBULENT; KURODA SPEECHUSDJPY: 1. Price action immediately following BOJ this september was more than erratic but at the same time showed some consistency for those of you who can remember back to Julys performance - we moved instantly lower on the decision to 101 flat, before ripping 180pips higher to 102.8 to then lose most of the bids and trade back to the 101 base. 2. The BOJ decision itself, imo, was less than clear compared to July though and almost warranted this kind of whipsaw behaviour - especially given the anticipation (or not so much) of the Fed later today which is likely to mingle with risk sentiment and dollar leg of USDJPY the like at some point. - The unclearness regarding whether the policy decision was net hawkish or dovish was given that there was no changes to the main policy tools (Depo, LSP, JGB, ETF), it would leave one thinking neutral-hawkish on expecttions - especially given a 5bps cut was the median BBG forecast. However, on the other hand, you had statements from BOJ including, "BOJ expanding its monetary base until it reaches its 2% inflation target" which is somewhat dovish given it puts never ending monthly JGB 80-100trn yen on the table for the next few years (unless the BOJ is delusional that less time is required). But at the same time this dovish statement was met by a bid from the BOJ to "increase yields for 10y JGB to 0%" and steepen the curve - which in itself is highly contradiction of ANY further expansion to the monetary base (given increases in money supply reduces rates). The BOJ knowing this then went on to cover saying "pace of purchases may fluctuate as to meet 0% target". Thus all in all the above, for me at least, left the overall decision uncertain at best. Given we are only 0.2% down it would be fair to say the outcome was infact neutral. Neutral BOJ and No hike Hawkish Fed was my prediction before (see attached) and i stand behind the 100 level being reached as USD demand is likely to be flushed at some level when the 10-20% priced into USD fed funds is flushed out. BOJ Decision: JAPAN BOJ RATE DECISION STAYS FLAT AT -0.1 % (FCAST -0.1 %) VS PREV -0.1 % BOJ DECIDES TO SET TARGET FOR LONG TERM INTEREST RATES JAPAN BOJ BASE MONEY TARGET STAYS FLAT AT 80 TLN JPY (FCAST 80.00 TLN JPY) VS PREV 80.00 TLN JPY BOJ: ADOPTS QQE WITH YIELD CURVE CONTROL BOJ: TO ABANDON MONETARY BASE TARGET BOJ SAYS NO OFFICIAL BASE MONEY TARGET, BUT MAINTAINS ANNUAL PACE OF JGB BUYING AT 80 TRLN YEN BOJ: TO KEEP BUYING JGBS SO BALANCE OF ITS HOLDINGS INCREASES AT ANNUAL PACE OF 80 TRLN YEN BOJ: INTRODUCES NEW MARKET OPS FOR YIELD CURVE CONTROL BOJ: TO BUY JGBS SO 10 YR YIELD HOVERS AROUND 0 PCT BOJ: PURCHASING YIELDS WILL BE SET PER AUCTION BY INDICATING THE SPREAD FROM THE BENCHMARK YIELD WHICH BOJ DETERMINES SEPARATELY BOJ: DEPENDING ON MARKET CONDITIONS MAY SET JGB PURCHASE SIZE PER AUCTION TO FIXED AMOUNT OR UNLIMITED AMOUNT BOJ: SCRAPS RANGE FOR DURATION OF JGBS THAT BOJ BUYS BOJ: BOJ TO CONTINUE EXPANDING MONETARY BASE UNTIL CPI EXCEEDS 2 PCT AND STAYS ABOVE TARGET IN STABLE MANNER BOJ: ADOPTS COMMITMENT TO LET INFLATION OVERSHOOT ABOVE 2 PCT BOJ: BOJ CAN CUT SHORT TERM POLICY RATE, TARGET LEVEL OF LONG TERM RATES IN FUTURE EASING BOJ: BOJ TO CONTINUE EXPANDING MONETARY BASE UNTIL CPI EXCEEDS 2 PCT AND STAYS ABOVE TARGET IN STABLE MANNER BOJ: BOJ MAY ACCELERATE EXPANSION OF MONETARY BASE AS FUTURE POLICY OPTION BOJ: PACE OF MONETARY BASE INCREASE MAY FLUCTUATE IN SHORT RUN UNDER MARKET OP THAT AIMS TO CONTROL YIELD CURVE BOJ: MAINTAINS COMMITMENT TO ACHIEVE 2 PCT INFLATION AT EARLIEST DATE POSSIBLE BOJ Kuroda:
Short
by QuantumLogicTrading
USDJPY Final Long Entry Before Invalidation! High R/R!This is a re-evaluation of the final corrective triangle structure. The reason why this is the LAST entry is because our stop can be comfortably placed beyond the invalidation level. A single pip below this level invalidates the count, and we have a huge risk to reward opportunity on which to capitalize. This is a risky position because the BOJ news is pending, so risk your capital intelligently. I will update with more updates as the tide rolls. Happy Trading All
Long
by glennmercer
1
EURUSD/ GBPUSD/ USDJPY - SELL USD ON RALLIES: ECB, FOMC, BOELautenschlaeger remained neutral on the margin, stating raising rates wouldnt help anybody but neither would the change to the APP or further cuts. This comes in line with last weeks ECB's to leave policy unchanged. I think this is more pressure for EUR bids but undoubtedly i think USD will dominate the pair until the fed on the 21st and fed funds pricing will sway EUR$'s price range until then. However, on a no vote, combined with the ECBs hawkish-neutral monpol decision my bets will be with EUR$ heading towards the 1.14 upper percentile of the range. Conversely a surprise hike decision will likely shock EUR$ 200-300pips lower than market on the day, though i wouldnt be surprised to see dips brought as we have consistently seen with EUR$ and monpol changes in the past 12m. On the day fed funds trade flat implying 15% probability for september, hence the shock risk is higher, though i do believe the true probability to lie somewhere near here. US 10yr yields also hit 3m highs today interestingly despite there being a risk-off lingering in the air. For USD now though I prefer to buy yen here on rallies in $Yen, yen broadly cheap given risk-sentiment and BOJ no move (in conjunction with FOMC now move). Also i think sterling is cheap here going into BOE, no action is going to happen imo given the strength of data so i prefer to buy dips into 1.310/5. The inflation "Miss" selling is an over-reaction given we are still at the higher levels recorded in CPI, and clearly there is a new normal lower with inflation which the market is under-pricing in GBP. Unemployment data and retail sales will be watched closely, beats will put GBP back on the bid to 1.34 (assuming BOE are neutral) especially given an FOMC no move puts the fed below their own targets and should cause firm supply. ECB Lautenschlaeger highlights: ECB's Lautenschlaeger: Raising Interest Rates Now Would Benefit Nobody, Not Even Savers or Banks ECB's Lautenschlaeger: I Still Consider Negative Rates to be Justified Despite Risks, Side Effects ECB's Lautenschlaeger: We Shouldn't Feel Obliged to Cut Rates Even More ECB's Lautenschlaeger: We Don't Seem to Have Reached Lower Limit For Rates ECB's Lautenschlaeger: See No Reason Now to Change Design of Bond-Purchase Program ECB's Lautenschlaeger: Must Give Bond Purchases Time To Work ECB's Nowotny Says Monetary Policy Should Stimulate Domestic Demand
Short
by QuantumLogicTrading
1
EurJpy Bullish Continuation for 280 PipsWe have witnessed in the recent week a beautiful and impulsive range/wedge breakout of the EurJpy. It led directly to the first downtrend line on the topside. Market rushed down in recent days back to the breakout point and stalled. I am seeing we are in for a bullish continuation of this multiweek range breakout towards the big downtrend line at around 117.10. I am long @ 114.25 with a tight 50 pip stop and looking for a move to 117.10
Long
by IamJeanPaul
Testing the top of a trading channel towards Kuroda's speechSince its rally from 100, $USDJPY price managed to climb above 2 MA lines and above the 102 structure zone (now all are support). Tomorrow morning (check local time) Kuroda is scheduled to speak. My longer term analysis suggests that the bullish move in USDJPY has just begun but it doesn't mean there can't be a pullback before the next bullish wave. 104 is the key zone to focus on this week. A breakout will lead to extended rally towards 108. A decline can trigger the two reversal patterns (Pinbar and Outside Bar) and lead USDJPY back to 102 and maybe even 100 again. This analysis is part of this week's newsletters - The Weekly Markets Analysis - Check out more trading ideas for stocks and Forex here - goo.gl Tomer J, The Market Zone www.themarketzone.net marketzone.tumblr.com - My blog www.youtube.com - Youtube channel
by themarketzone
EURJPY: Trend following made easyI'd like to share a trade opportunity in this pair. You can see how the moving average on chart shows when it's a good chance to short this pair, looking to rejoin the dominant downtrend in place. We can now enter at market, (if not already in...I'm short from 116.191, and added at 115.164). The price has hit a strong level, which coincides with the mid point of the Brexit induced decline, as well as a recent daily downtrend's resistance, so I expect this pair to roll over, and proceed to accelerate to the downside soon. Good luck if taking this trade, Ivan Labrie.
Short
by IvanLabrie
7
Will Kuroda Sink The Yen in his speech in a few hours?USD/JPY opened higher than the Friday close to a small retracement in it's initial hour and price is now trying to push high (hourly view) with a wick formed above today's open on the next candle. Markets could be primed for the Bank of Japan Chief Kuroda who is due to speak in the early hours of Monday and as per recent speeches he will likely be seeking to manipulate Yen strength to support Japanese exporters. Let's wait and see what happens, the position here is long USD/JPY.
Long
by Elliot_Myers
USDJPY testing bearish trendlineUSDJPY is ending the trading week at a level that leaves us all in suspense for the start of next week. The pair is currently trading at 103.96 with a big resistance level at 104.00-30. There would theoretically be a potential for a double bottom should prices break above this resistance next week, but one would be hard pressed to aggressively short the yen so long as it trades above its support level. Basically, this is a make-or-break moment for USDJPY in which we will either see renewed selling pressures (trend continuation, possibly followed by a break below 100 if the dollar comes under sustained pressure in the weeks ahead) or a bullish breakout (possibly fueled by intensified speculation over an extension of the BoJ's QE program + maintained called for a Fed rate hike).
by ABRAK75
5
DXY/ USD: WEAK ISM PMI FLUSHES USD BIDS - FED MESTER SPEECHUSD disappointingly failed to maintain its heavily demanded week when ISM PMIs not only fell short of expectations but also showed a slight contraction by slipping across the 50 mark to the downside. This data pattern however has been consistent for USD, where it has failed to show any upbeat prints, though in the past months the Job market has been able to stand out from this trend so it is difficult to read too much into what the report tomorrow will show. As discussed in my post last week, i believe the risks are to the downside and even more so that Fed mester has stated that employment has reached capacity and 75k-100k a month will be enough to maintain the rate - a figure like this tomorrow would surely see DXY move back into the 94s, with september expectations likely to drop into the 12-18% range that it had maintained before yellen last week. Fed Mester on the whole was neutral, offering little to support the dovish or hawkish side. USD Positioning: In terms of positioning, given $Yens rapid 6-day appreciation (today would be the 7th on a close above 103.45) I am looking to get short if we can get a close just 15pips higher than market, as a 7th day on the up has only been seen 3 times in the past 16yrs so shorts here are statistically in play - though of course NFP upside bodes a risk, but given my expectations going in (downside) it is a risk I will be willing to take (not to mention i expect market risk to spike increasing yen demand - but i will discuss this in a separate post if we close higher tonight). My long favoured short GBP$ trade is currently hanging in the balance, with little negative data to illustrate brexit impacts coupled with USD data unable to get a footing it is hard to continue with the "short sterling on rallies" approach, given topside is becoming arguably justifiable, if we see Services Monday and construction friday PMIs above the 50 level, short GBPUSD on rallies will no longer be a conviction trade, as there will be no real macro case outside of the broad "brexit uncertainty" which by all accounts is waning as optimism and confidence measures are fading the downside spike. Ask yourself, going forward assuming data holds up which it should, what further reason does the BOE have to ease or GBP have to fall? Brexit negs arent likely to start until Q2 2017 so we have a firm 6m of "stability".. especially when you think of sterling with respect to the massive 1000-4000pips its lost (cross ccy) into brexit, upside from here is certainly possible even if it is just a recovery rally. Trading NFP on a 220k print is also possible as a tactical trade e.g. long DXY, as DXY is likely to offer lower some more going into the event as the market derisks. Fed Mester Speech Highlights:
TVC:DXY
by QuantumLogicTrading
8
SELL GBPJPY: RISK-OFF SHIFT COMING? LOWER BOE MONPOL EQUILIBRIUMGBPJPY: 1. Given Fed Yellen's "hawkish" market response and GBPUSD, GBPNZD and GBPAUD shorts TPd on the rally lower today cleared (FX risk book clear too), im looking to add some safe haven assets to my portfolio. 2. Looking at GBPJPY and GBP structures on the whole, there has been alot of sterling longs in the past 2wks accumulating in spot as economic confidence falsely increases (imo, given intelligent money understands near-term UK risks are to the upside). - GJ rising some 7 of the last 9 days, and now 400pips above the aug 16th lows of 129 at 133.3 I think there is at least that 400pips in downside available from here as the new equilibrium for several reasons: 1) Fed Yellen being hawkish looks like it may be the catalyst for the september US Equity sell-off, in which case, highly negatively correlated assets (e.g. safe havens yen, gold UST) are likely to pick the bids up, thus driving GBPJPY lower i.e. A tightening of financial conditions in the US will put pressure on US equities and also US election risk will transfer into Yen demand - also Brexit/ A50 risk is a medium term yen topside catalyst which makes sense owning through GBPJPY downside. 2) GBP shorts at these levels, given the monpol introduced by BOE, look like the smart move as the market is significantly higher than the monpol lows (which should be the new equilibrium). 3) Further BOJ action is made more unlikely by a hawkish Fed - hawkish fed looks to have provided $yen some topside support in the immediate term if nothing else, this eases pressure on the BOJ to ease - though a counter to this is the recent BOJ Inflation CPI traded some 30bps lower at 0.5% - the biggest drop since its inception (and the lowest level ever) this could be a push to more easing. However, the July Meeting misfire when expectations were perhaps at their highest and the current JGB drying liquidity situation somewhat capping the extent of further easing, I cant see the BOJ doing anything more than jawboning, as they have consistently continued to do (and about the only thing they have). Also for extra confidence, even if the BOJ was to ease - look at the past 2 times (Jan April), both policy measures provided 0 equilibrium relief to yen downside and infact fueled some 500pip+ topside to yen, so yen bulls imo can feel conforted that further easing is likely to have little impact, even more so as their ability to do more is ever reduced. 4) Technically, as mentioned weve been on a 2wk bull run so i feel GBP topside is due a rebalancing lower, and also the downside targets are not uncharted territory having traded at the 129 level on 2 previous occasions so the profit target isnt unreasonable. 5) I hear RM long-term short positioning, is picking up at these levels where sterling looks arguably overbrought. Trading Strategy - SHORT GBPJPY @133.3, add at 134 135 and 136 - TP 130.5 and 129 1. Short GBPJPY - Small at market price 133, and add ever 100pips higher if bulls continue up to 136 - the macro resistance levels on the daily are the 134 and 136 level. - Short small here at 133.3 and ADD as we move higher as short sterling given brexit/ monpol future and long yen given the risk-on bull run which is bound to run out given hiking and election risk intensifying imo is an all but guaranteed trade. Any questions on the trading strategy PLEASE ask!!
Short
by QuantumLogicTrading
4