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GOLDEN WEEK: Potential nightmare ahead. If you've never heard of the Yen 'flash crash' on 3rd Jan 2019 (after a 4 day bank holiday in Japan), you definitely need to watch this. We have a 10-day bank holiday in Japan in Golden Week. The previous mini-crash was on one day. Loads of retail forex traders were wiped out. Now we're staring at potentially something more than a mini-crash on Yen pairs. What happens during and shortly after the holiday period is that contracts for forex come in, algos react and /JPY ratios head south, like nobody's business. Well, I'm afraid this is your business if you have any /JPY pairs on a live trade. Worse yet if you're long be very careful. AUD pairs were also caught up in the fray as they are affected more by stuff that goes on in Japan. Don't ask me why. LOL. It is what it is. So /AUD pairs can rock north if this thing happens again. Right - I'm not here to scare-monger anything. I'm here to help. I'm bringing knowledge of a potential systematic risk that is approaching. You decide what you do with your trades. I'm not advising anybody to close their /JPY trades. Your decisions and your losses are your own. End off.
by Captain_Walker
1
Draghi departure & fate of euro, CB of Canada & Japan decisionThe main event on the foreign exchange market yesterday was the announcement of the outcome of the Bank of Canada meeting. For the fourth time, the Central Bank did not raise the rate. The decision is predictable and has been accounted for in the Canadian dollar price. But what was not considered? The fact that the Bank of Canada completely removed the mention of the possibility of a rate hike in the future from its statement. This was a surprise. For the Canadian dollar surprises with a “minus sign”. So, its sales could be called logical. The rest of the Wednesday was a rather quiet day. Dollar growth has stalled. In the absence of additional drivers for growth. However, today a surge of volatility in dollar pairs might occur after the publication of data on orders for durable goods in the United States. Well, almost certainly not avoid a “roller coaster” on Friday, when data on US GDP for the first quarter will be published. In relation to relatively calm news background, investors and traders decided to attend to promising events. In particular, what will happen with the euro after the Mario Draghi departure from the post of President of the ECB? According to analysts at UBS, the euro is waiting for its growth regardless of who takes the chair. Motivation - a new president - is a reason to start tightening monetary policy in the Eurozone. That is a positive factor for the euro anyway. So those who are engaged in long-term trading should pay attention to buying euros, which is quite cheap lately. Another important Central Bank’s meeting this time in Japan was held today. Traditionally, the Bank of Japan did not adjust the country's monetary policy. But at the same time, Central Bank made it clear that the ultra-soft monetary policy will continue until at least 2020. In addition, the Central Bank lowered its forecasts for inflation and GDP in Japan. In general, this is quite a sickening blow to the yen, so its sales remain relevant. So, we are continuing to recommend to buy USDJPY. According to the US Department of Energy, oil reserves in the United States have risen sharply over the past week (+5.479 million with a forecast of +1.0 million). Despite this clearly bearish signal, oil did not decline. This once again confirms the current situation in the oil market: buyers dominate. This means that it is necessary to continue to look for points for buying on the intraday basis. As for our other positions, today we are continuing to look for points for selling the dollar against the euro, pound, and also the franc. In addition, we return to the gold buying on the intraday basis.
by Trade24Fx
Trump vs Fed, trade negotiations and recession risksTrump continues the crusade against the Fed. He is absolutely not satisfied with the current monetary policy of the Central Bank of the USA, and he keeps reminding in his twitter. He accused the Fed that the Central Bank slowed the growth of the US economy on Sunday, also impedes the growth of the US stock market. Recall, the Fed is an independent body and has the right not to coordinate monetary policy and its actions with the US President. Such a position does not “play into the hands” of the dollar. So, our position in the foreign exchange market remains unchanged: we are looking for points for selling the dollar. Meanwhile, the United States launched negotiations on trade wars on all fronts, literally. Recently the main attention was focused on China, now negotiations are simultaneously being held with the EU and Japan. In general, it is a positive signal for the global economy and risky assets. Another signal was the meeting of IMF representatives and the World Bank. Despite the fact that the IMF has already lowered forecasts for economic growth rates three times in a row, representatives of the IMF and the World Bank agreed that the risk of recession remains very low. So, the current decline in gold and the growth of USDJPY is explicable. Nevertheless, there is no material evidence of actual progress in the negotiations, with the exception of individual comments. Therefore, we continue to look for points to buy gold on the intraday basis. We are buying USDDJPY, which acts as a hedge. As for our trading preferences, we will continue to look for points for dollar sales in the foreign exchange market (with the exception of USDJPY, which we are still buying). We are buying gold and oil in the commodity markets. In addition, we continue to sell the Russian ruble.
Long
by Trade24Fx
USDJPY Long-Term Short, Resistance Range Too Strong to SurpassThe conversation on the Japanese yen is as much about the US economy as much as it is about the Japanese economy. This is mainly due to the fact that the Japanese yen acts as a safe haven asset during times of downward volatility, even if that volatility stems from Japan such as the natural and nuclear disasters that rocked the archipelago nation in 2011. Moreover, while the more common tools of prediction like ordinary least squared models can provide a bit of accuracy in price action, it clearly lacks a precise target. This is especially the case given technical resistance and support levels even though the Pearson’s R statistic suggests a high degree of model fitness. Nonetheless, the macroeconomic trends suggest that while there is a 95 percent probability that price action moves to a range of 111.705 and 112.157 by the end of April, observers should not be surprised if price action moves towards the lower end of the 95 percent confidence interval towards a range of 109.595 and 109.771. These primarily include the continued downgrading of global economic growth by the EU, the IMF, the OCED, and the World Bank. Truly, there is now a global growth slowdown of the major world economies including the EU, China, and increasingly the United States. In the United States, the USD side of USDJPY, the FOMC will release its meeting minutes later in the day explaining to investors why the Fed made a 180 turn from hawkish monetary policy to dovishness which inspired traders during the day this policy position came out to retreat from equity markets. This was mainly due to the fact that investors believed the FOMC knew something they didn’t, specifically that the FOMC had data pointing to an increase in a US slowdown (a negative for USDJPY). We will find out the degree in which this is true later. While CPI figures that came out this morning were quite promising coming in at 2 percent, sentiment figures from the University of Michigan come out on Friday which are forecasted to be worse than last month’s figures. Aside from a slowdown in global growth and the potential of a recession in the upcoming year, there are many more overarching thematic trends in the global economy that would suggest the Japanese yen may in the longer-term become stronger against the US dollar. This includes primarily the uncertainty surrounding Brexit and the desire of US President Donald Trump to continue his trade wars with the world. Both of these issues, if not managed properly by central figures, could spiral out of control and have a dramatic negative effect on global markets potentially spiraling into something more than what they intrinsically inherent. Overall, there are many more reasons to be bearish than what there are to be bullish on USDJPY. This trend could reverse as the world could currently merely be in a trough of a global growth slowdown. However, these trends tend to not reverse as quickly as other trends such as forex price action. Because of this, my long-term view remains the same from months prior which is primarily that observers should be careful this late in the cycle. Foreign exchange markets will be some of the first to react to any realization of volatility while equities tend to be more knee-jerk reactionary. Since this is the case, it will remain key to keep an eye on safe haven assets such as USDJPY in order to maintain a finger on the pulse of global financial markets.
by WhiskeyTangoFoxtrot3
USDJPY Sideways Because it Likes Less Steep SupportWhile the Japanese yen had been trading on an upward short-term support line, last week it broke this line. Interestingly enough though, it found another level of support similar to the previous level of support, but just with a bit of a less steep slope. Clearly there is much evidence to suggest that the Japanese yen should be taking a nosedive. Compelling evidence for the contrary as well. But if we are just looking at short-term movement, its clear that for the moment USDJPY prefers a more sideways move as opposed to a strictly long or short move.
by WhiskeyTangoFoxtrot3
USDJPY Short Because Technicals Flash Overbought, Yen Safe HavenUSDJPY has a number of trends going against it to force price action downwards. Technicals and fundamentals are not on the dollar's side against the yen. Traders can see a number of oscillators and MAs suggesting USDJPY is overbought and due for a reversal. Moreover and probably more impactful are the fundamentals of the global economy which suggest major growth centers (Europe and China) are slowing down. US treasury yields suggest we are heading towards a recession and US GDP growth is probably going to be less than previous quarter for the second quarter in a row. Because of this, the yen will be heavily invested into which will partially be a result of institutional hedging, partially Japanese capital flows returning to Japan. While the dollar will also benefit from this, it will probably not benefit as much as the yen in the short term since the US economy is still strong and many in the US still want to be exposed to risk-on assets like equity markets. In spite of this, sentiment indicators suggest the yen is set for a bullish move, but this can quickly reverse. You can find that data here www.dailyfx.com and you can find more analysis of currencies and indexes here www.anthonylaurence.wordpress.com
Short
by WhiskeyTangoFoxtrot3
The price returned to test the medium term key supportThe price returned to test. The price returned to test the medium term key support at 123.8. If it were violated to the downside with closure below it would be a strongly bearish scenario. This would immediately lead it to the next static support at 122.6. Within a couple of sessions then could try to break it down. The pair could reach the next support area at 118 in a week. If, on the other hand, this level, where is the price now, resisted, a very short uptrend will follow up to the static resistance set at 125.7. Most plausible scenario Given the macroeconomic situation that is causing markets and investors worry, it is very likely that shortly we will be able to see a retracement of the main indices. This shifting investors to Japan’s currency. The scenario that is taking shape in the European currency also weighs heavily. The ECB’s stagnant economic and monetary policy is weakening the euro. The currency will continue to depreciate throughout 2019.
Short
by BFCMInvest
USDJPY Drops Because The World Is Freaking OutThere are a number of fundamental components that caused USDJPY to collapse on late Friday trading at the end of the North American session. Traders became spooked by the yield curve inversion which tends to be a sign of an impending recession. Traders were also not very happy with dovish Fed speak earlier in the week, chaos around Brexit, and no respite from the global economic growth slowdown ((you can read more about all these issues here: www.linkedin.com On Friday,; it also became apparent that German growth is significantly affected by the US-China trade war contributing to its slowdown with German PMI data coming in at 44 when 47 was expected. Speaking of the US-China trade war, the US sanctioned two Chinese companies for their dealings with North Korea in the vain US attempt to fight both the North Koreans on nuclear issues and the Chinese on trade at the same time. This will definitely complicated trade matters. The point is, all of this is freaking out global investors who then poured money into the Japanese yen as it is traditionally viewed as a safe haven currency and moreover is also a popular starting point for the carry trade given that interest rates are so low in that country. However, the flight to safety complicates this with increased foreign exchange risk given the overall trend of strengthening. Nonethless, expect this flight to safety trade to continue in the long-term (several months to a year) while in the very short-term (a day to a week) we could see a bit of a pullback given the RSI indicator flashing oversold and the bear bull indicator suggesting USDJPY short is overcrowded.
by WhiskeyTangoFoxtrot3
Not a Fan of that Resistance or PerformanceWhile there is much room to go before we hit resistance, I am really not a huge fan of this overall lackluster performance. Keep in mind, the BoJ owns upwards of 80 percent of the entire Japanese ETF market. 80 percent. Let that sink in. Also, export data is weak in an economy where exports make up 18 percent of GDP. If we gain five percent from today, nobody will be happier than me as my overall macro view will gladly change. I can sleep at night being wrong on five percent. But really though what could possibly lead to that given the last three months where some Asian markets like the Shanghai Composite would gain 5 percent in a single day while Japan is asleep? Just not convinced. More fundy and technical analysis on Asian markets as they move today here: anthonylaurence.wordpress.com
INDEX:NKYShort
by WhiskeyTangoFoxtrot3
NINJA - an evaluationFUNDAMENTALS: JPY: - Rates remained the same in Japan, doubt they'll change anytime soon. - ageing population, shrinking AD in the economy. - Slow wage growth, however Abe has introduced a minimum wage to combat low levels of AD, but a weakening JPY will make it difficult for consumers to spend abroad - Which is good as the BOP will correct itself (X-M) - we're currently in a Balance of payments deficit in Japan. (Q418). - The elephant in the room: DEBT! Japan has the one of the highest levels of debt amongst developed countries at 236% of GDP in 2017. This in partnership with a trade deficit is extremely mischievous, the need for "Abenomics" is crucial lol. - China is Japan's biggest trade partner - as is lots of countries such as AUD, NZD. China saw a slip in growth Q418 at 6.4% down from 6.6% in Q318. China is a source of AD, low AD results in less demand for the JPY. USD: - Rates are staying the same. - middle aged population, still has a lot of work left in them lol. - Protectionism from Trump has promoted domestic productivity at the expense of Chinese AD. Unemployment rate down from 4% to 3.8% thanks to Trump. - Modest levels of inflation at 1.5% down from 1.6% - FED: balance sheet correction. Hence they have confidence in the economy to sort itself out, therefore rates remaining the same. TECHNICALS: JPY: -Fibb 50% level is being tested. -upward daily trend -currently bouncing zone on the monthly (bullish) -targets 114+ extended targets @118 -currently collecting buys on the daily and lower USD: -DXY is about to break out of its weekly bullish channel -DXY has rejected 97.50 resistance, next support area is 96.0 -However DXY: consistent higher lows have been made. Indicating a potential bullish break of range in the foreseeable future. However: -Daily candle has closed outside of the uptrend channel. Hence some downside could be felt toward the 110 area before further elevations to 114 and beyond.
by LouisSugunaFX
USDJPY Very Bullish on Monthly ChartHere we can see the zoomed out macro map for the flows in usdjpy. If you are a believer in the bullish USD story and see this as an ABC corrective leg, after completing a multi decade 5 wave sequence. Timing wise we have the seasonality flows to Yen as we approach the end of the fiscal year. Although the name of the game is to park in dollar so these are expected to be short lived. Similar in nature to the temporary bounce we are seeing in Gold. I have also attached the Dollar chart "Long term uptrend is clear as day" ... everything is aligning for this leg in dollar across the board. The story ties in with the 1.05 target in EURUSD. Lets see how it plays out, best of luck to those on the dollar side.
Long
by ridethepig
1