JPY news

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BOJ Rate Decision: Bank of Japan Toes the Line on Monetary Policy as Economy Gains Momentum

The Bank of Japan (BOJ) kept interest rates on hold Friday after its two-day meeting, as policymakers assessed recent improvements in the world’s third-largest economy.

The BOJ held its benchmark interest rate at -0.1%, where it has stood since the start of 2016. The decision was widely expected my market participants, who expect the Japanese central bank to maintain a dovish tone for the interim.

Central bankers also voted to maintain their purchase of Japanese government bonds so that the 10-year JGB yield remains at zero percent. The overall value of the bond purchase program was kept at a pace of ¥80 trillion annually.

USD/JPY: Breaking A Pattern; What's Next?

If USD/JPY holds onto its gains this week, it will be the first weekly rise in USD/JPY since January 2016 during a week when the BoJ and FOMC have each held meetings.

"Importantly, a big part of the reason behinf this break in pattern was the FOMC sounding more hawkish and pushing US yields higher. The BoJ, however, maintained its commitment to its QQE and yield curve control (YCC) policies.

Risk sentiment also remains stable and a downside pressure on the JPY, but it is worth noting that there is less carry for investors to trade this summer, which could mean less downward pressure on the JPY than in previous quiet periods.

The Fed’s outlining of its balance sheet reduction strategy could lead to steepening in the UST curve, from very flat levels, and weigh on the JPY

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USD/JPY forecast for the week of June 19

The USD/JPY pair fell initially during the week, but found enough support underneath the 110 level to turn around and form a hammer. The hammer of course is a very bullish sign, and a break above the top of the candle should send this market much higher. I think that the first target will be the 112 level, and then eventually the 115 level above. I think the fact that we have formed 2 hammers in a row on the weekly chart suggests that we are looking to see strength in the market. This will of course be a market that is reacting to the Federal Reserve and the more hawkish than expected stance. Because of this, the market should continue to go to the upside and favor the US dollar as the Bank of Japan is obviously miles away from doing anything even remotely looking like hawkish behavior.

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Japan’s Merchandise Trade Surplus Swings Into Deficit in May

Japan’s trade surplus swung into deficit in May, as imports rose faster than exports.

The Ministry of Finance reported a May merchandise trade deficit of ¥203.4 billion, down from a revised surplus of ¥481.1 billion in April. Analysts in a median estimate called for the surplus to narrow to ¥76 billion. That was the second time this year that Tokyo posted a trade deficit.

USD/JPY Maintains Recent Gains

USD/JPY made a run to the upside in last Thursday’s trading and managed to hold onto those gains on Friday and is maintaining within the boundaries of last Friday’s session today. At present, the pair is trading at 110.99, a gain of 0.11% over last Friday’s close.

With Thursday’s move to the upside, the pair broke solidly above resistance defined by the low established May 18th, at 110.24. This break above resistance is a positive development that leaves the next target at June 2nd’s 111.71 high. On a move above this level, the next target is at May 24th’s 112.13 high.

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USD/JPY Undermined By Lower Oil Prices, US Data In Focus

The dollar will struggle to make renewed headway in the short term unless there is a significant increase in US yields. Trends in oil prices will have an important impact on both yields and the dollar.

USD/JPY hit resistance close to 111.80 in US trading on Tuesday and support gradually eroded with a decline to the 111.30 area.

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Japanese Foreign Bond Investment Rises Sharply in Latest Week

Capital flows into Japanese bonds rose sharply last week, data from the Ministry of Finance showed on Thursday.

Bond investment by Japanese nationals abroad rose by ¥1.09 trillion in the week ended May June 16. Meanwhile, foreigners sold a net of ¥331.6 billion worth of stocks in the same week.

The Bank of Japan (BOJ) kept monetary policy on hold last week, as officials evaluated the recent pick up in the economy. The BOJ also voted to maintain its purchase of Japanese government bonds so that the 10-year JGB yield remains at zero percent.

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Japan Flash Nikkei PMI Weakens to Seven-Month Low in June

Japan’s manufacturing industry weakened unexpectedly in June, a sign that the latest upturn in factory conditions was still prone to volatility.

The IHS Markit Nikkei flash manufacturing purchasing managers’ index (PMI) weakened to 52.0 in June from 53.1 the previous month. That was the lowest level in seven months. The reading confounded a median estimate of economists, which forecast a slight increase to 53.4.

A PMI above 50 signals expansion in economic activity, whereas a reading below that level indicates contraction. June was the tenth consecutive month manufacturing activity expanded.

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USD/JPY forecast for the week of June 26

The US dollar rallied during the week, breaking above the top of the hammer from the previous week. That’s a very bullish sign, especially considering that the hammer formed on the 50% Fibonacci retracement level. A break above the top of the candle for the week should send this market towards the 112.50 level. If we can break above there, the market should then go to the 114 handle. The market looks very likely to be volatile, but I believe that the most recent low being higher than the previous one is a very bullish sign, and the fact that the hammer is sitting right at the gap also gives me reason to think that the buyers are to get involved. On top of that, we have the 110 handle it that region, so I believe that no matter what happens, the buyers will return to this market.

USD/JPY Rallies Through Major Resistance In Late Day Trading

Resistance at 111.72 has been a major hurdle for USD/JPY over the past two weeks. The pair is seen testing the level five times on an hourly chart and sellers have defended the level on each occasion.

The level is considered important as it held the pair higher in early February to trigger a recovery that lasted until March. More recently, the level acted as resistance at the start of June.

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