JPY news

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Japan Q4 GDP Expands 0.2%, Missing Forecast

Japan’s economy grew at a steady pace in the fourth quarter, although the rate of expansion signaled strong headwinds for a nation struggling with deflation and weak domestic demand.

Gross domestic product (GDP) expanded 0.2% in the October-December period and 1% annually, the Cabinet Office said in a preliminary estimate on Monday. That follows a 0.3% expansion in the third quarter that disappointed preliminary estimates that showed stronger growth.

Economists in a median estimate forecast GDP to expand 0.3% on the quarter and 1.1% annually.

With the gain, the Japanese economy has now expanded for four consecutive quarters, although the rate of growth has steadily declined over that period. Recent data on manufacturing and employment suggest the economy is gradually improving, although uncertainty about global trade relations could create fresh headaches for policymakers.

Analysts have noted the potential for a major rift in trade relations between the United States and Japan following the election of Donald Trump. After inauguration, Trump immediately withdrew the United States from the Trans-Pacific Partnership (TPP), a deal that Prime Minister Shinzo Abe strongly supported. With the death of TPP – a deal that was widely regarded as one of the most ambitious of all time – Japan must now look for new avenues for strengthening the globalization narrative.
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USD/JPY: Lower Bound Confirmed But Topside Remains Heavy: Staying Neutral - BTMU

USD/JPY – NEUTRAL BIAS – (112.00-115.00)

USD/JPY has crept up to near the 114-level after Fed Chair Yellen’s slightly hawkish comments before retracing lower.

Recently US economic data was better than expected, but even so topside has been heavy, at below 115. Seasonal cash repatriations and the US dollar weak momentum have slowed USD/JPY rise. That said, the lower bound for USD/JPY was also confirmed.

The BoJ’s yield control operations have caused some volatility, but have not impacted the JPY considerably due to the difficulty in operation structure.

Key currencies have been steady ahead of President Trump’s State of the Union address next week. USD/JPY may also keep trading in a narrow range.


USD/JPY Weekly Forecast February 20-24

Last week was volatile for USD/JPY, as the pair advanced Monday into Wednesday, setting a high for the week at 114.96. However, sellers stepped in once this high was established and the pair declined into Friday, ending the week below 113.00 at 112.90. This represented a loss of 0.27% for Friday and a drop of 0.29% for the week overall.

The pullback is serving to ease a modest overbought condition which developed as a result of the advance from the February lows. With the Stochastic, a price momentum indicator, producing a downside cross and still moving lower, the bias in USD/JPY heading into next week is to the downside.

First support at the downward sloping trendline defining price action since the start of the year is being testing as a result of the recent pullback. Also in play is the 61.8% retracement level of the February low to last week’s high. A decline below these converging levels of support would call for a drop back to the February lows, near 111.60. These lows are in the same vicinity as the corrective bottom established in late November at 111.36.

Breaking down below this zone would suggest USD/JPY has formed a broad topping formation and would leave the target at the 50% retracement of the advance from the November low to the December 15 high. This retracement level stands at the 109.94 level.
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Japan data - All Industry Activity Index (December): -0.3% m/m (vs expected -0.2%)

This is a broad measure for the Japanese economy and is used as a GDP proxy

For December comes in % on the month
  • expected -0.2% m/m, prior +0.4%, revised from +0.3%


USD/JPY forecast for the week of February 27, 2017

The USD/JPY pair initially tried to rally during the week, but as you can see pulled back to form a bit of a shooting star. It looks as if we are trying to press against the 111.50 level to the downside, but I think there’s a lot of support there as well. If we can break down below there, then it’s more than likely going to be a moved to the 110 level that we see next. That of course would have to deal with the 50% Fibonacci retracement level from the recent pull back.



USD/JPY Weekly Forecast February 27-March 3

USD/JPY is currently trading with the downside bias. It appears as though a test of first support will take place. The support stands at 111.59. At week’s end, the pair closed at 112.14.

The release of the FOMC minutes on Wednesday resulted in a selloff in the dollar, which caused a pullback in USD/JPY. The weakness extended into Thursday. While the dollar attempted to recover on Friday, after the release of strong economic data, investors still sold dollars over political concerns.

At present, first support for USD/JPY is at the low established February 6 at 111.62. This low represents a test of the low established in late November at 111 36. A drop below this area would suggest USD/JPY has established a broad topping pattern, and would leave the long-term bias to the downside.

With the stochastic moving lower, but not above and oversold level, the bias is to the downside heading into this week.

On the upside, first resistance is at the February 21 high at one 113.78. However, in order to improve the broader outlook for USD/JPY, a sustained move above the February 15 high at 114.96 is required.
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The USD/JPY pair exploded from the 38.2% Fibonacci retracement level during the week. It now looks as if we are going to test the 115 handle, and if we can break above there I believe that the market will reach towards the highs at 118.50 again. Short-term pullbacks offer buying opportunities, and thus I have no interest in selling this market and believe that the longer-term uptrend should continue. This makes a lot of sense as the central banks from the respective countries are moving in opposite directions.


The USD/JPY pair rally during the day on Friday, breaking above the 115 handle. We are starting to run into a bit of resistance, but I think the pair is about to break out, and with that being the case I believe that we will reach towards the 118.50 level. We will have pullbacks in time to time, but those should end up being buying opportunities as the market looks ready to continue the longer-term moved to the upside. With the Federal Reserve raising interest rates several times this year, that should continue to fuel this market.



BOJ announce: No change in policy (as expected)

The Bank of Japan monetary policy announcement for its March meeting

  • BOJ keeps monetary policy steady
  • Maintains short-term interest rate target at -0.1 pct
  • Maintains 10-year jgb yield target around zero pct
  • Decision on yield curve control made by 7-2 vote
  • Sato, Kiuchi opposed decision on yield curve control (Kiuchi proposed saying inflation extremely slow ... defeated 8-1)
  • BOJ leaves unchanged pledge to buy JGBs more or less at current pace so its holdings increase at annual pace of around 80 trln yen
  • Bank keeps economic assessment unchanged, says it continues to recover moderately as a trend
  • Cuts view on housing investment ... housing investment moving sideways


BOJ Rate Decision: Interest Rates, Yield Curve Targeting Left Unchanged

The Bank of Japan (BOJ) kept monetary policy unchanged Thursday for the sixth consecutive month, as officials maintained their policy of negative interest rates and yield curve targeting.

In a 7-2 decision, the central bank voted to keep interest rates at -0.1%, where they’ve stood since early 2016. The outcome of the policy meeting was in line with the consensus forecast, which called for interest rates to remain on hold.

BOJ officials also vowed to continue purchasing Japanese government bonds so that the 10-year JGB yield would remain at zero percent. The size of the government bond purchases was kept at ¥80 trillion annually.

Japanese monetary policy has been left unchanged since September, when officials decided to shift course on a program that was yielding very little results. Domestic growth remains weak, but measures of core inflation appear to be improving. Core inflation returned to positive territory in January after a year of negative growth, the national statistics bureau reported earlier this month.

The core consumer price index (CPI) edged up 0.1% in the 12 months through January. Core-core inflation, which excludes food and energy prices, advanced 0.2%, official data showed.

The BOJ warned of risks to its inflation outlook at the January policy meeting, even as policymakers upgraded their growth forecasts. However, central bank head Haruhiko Kuroda appeared to shrug off concerns over U.S. President Donald Trump’s protectionist stance even after he withdrew Washington from the Trans-Pacific Partnership (TPP) – a deal that was strongly favored by Japanese Prime Minister Shinzo Abe.
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