Yen Remains Pressured After BOJ Refrains From Easing Policy

Japanese economy remains fragile

Coming back from the Easter holiday there is lots to report. The BoJ refrained from easing, at least until April 27th. The Aussie is supported by solid China trade data, however an Australia rate cut weighs expectations.

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The Bank of Japan (BOJ) today refrained from more easing, and as a result, earlier the Yen rose across the board and was higher against the Dollar.

Many analysts foresee though, that the Yen will find itself under pressure on the expectation the BOJ could loosen its policy later this month. The BOJ will issue its economic outlook and price forecasts on the 27th of April.

The Yen has pulled away from Monday’s one-month high of 81.19 against the Dollar, which followed weak U.S. jobs data which showed that U.S. nonfarm payrolls increased by 120,000 in March, the smallest amount in five months, however it remains vulnerable to bouts of short-covering.

Japanese importers continued to sell the Yen, as purchases of fossil fuels increased as a result of all but one of Japan’s nuclear reactors having gone off line, following the Fukushima nuclear disaster a year ago.

The Yen has weakened by more than 6% this year as the Japanese economy remains fragile with consumer inflation nearly at zero. As a consequence, there remains strong pressure for more stimulus.

The Euro was standing flat earlier at 106.80 Yen, mainly it appears as a result of stop-loss buying in the pair triggered by U.S. banks.

The Euro gained 0.1% to the Dollar and moved away from Monday’s one month low of $1.3033 to $1.3120. The Euro was within 0.1% of a three month low against the Pound ahead of France and Italy auctioning debt this week.

France is scheduled to auction a total of 7.8 billion Euros ($10.2 billion) of bills today. Italy will sell 11 billion Euros of bills on Wednesday, followed by an offering of debt maturing from 2015 to 2023.

If the outcome of the Italian auctions are as bad as the Spanish sales of last week, it could trigger selling of the Euro.

Many investors remain focused though, on the recent soft U.S. payrolls data and expect that this may bring forward the next round of quantitative easing. As a result risk assets remain reasonably resilient.

The market’s eyes are turned to Federal Reserve speeches looking for any hint of more easing. Easing which would likely see the U.S. Dollar fall to the benefit of risk currencies.

The converse remains true also, in that should the Fed signal that the bar for further stimulatory policy remains very high, then risk assets, which would include the Australian Dollar, may well be hit hard.

The Dollar Index dropped after Fed Chairman Ben Bernanke had said at a conference in Stone Mountain, Georgia, that the U.S. economy is far from a complete recovery, spurring speculation the Fed will boost stimulus. Further speeches are also scheduled for Dallas Fed President Richard Fisher, Atlanta Fed President Dennis Lockhart and Minneapolis Fed President Narayana Kocherlakota.

Chinese Customs data released today, has shown that exports had grown faster than expected, and that China has recorded a $5.35 billion trade surplus in March. As a result, the Aussie was supported at $1.0307.

The Australian economy is very sensitive to news out of China, which is its key export market. The Aussie though remains weighed down by soft local data, continuing concerns about a hard landing in China and expectations of a domestic rates cut in May.

All the best!
Adrian Jones

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EXOTIC TRADING

Yen Stronger After BOJ, Euro Losing Ground

The Japanese Yen strenghthened against the major currencies in early trading on Tuesday, after the Bank of Japan press conference revealed no further monetary easing policies.

Meanwhile, the Euro was stronger since the open of trading this week but has since lost ground in early trading during the Asian session.

News Watch For EURJPY

With the Bank of Japan press conference out of the way, there are no further High Impact news releases scheduled for the rest of the week.

EURJPY Analysis

As expected, the EURJPY pair continued on its way down so let’s re-assess the current state of play, take a look at the chart below:

As you can see, I have inserted a bearish channel, and with Hidden Bearish Divergence being present on my charts, it will be interesting to see if price will remain within this channel.

At the moment, I’m waiting to see whether the current candle will close below the lowest low of the week (106.114), before considering any potential short entries.

Potential targets for sell trades include the 105.700 level or the lower bearish channel trendline.

For now though, we’ll have to wait and see how the chips fall over the next few candles.

Take care and all the best for the week ahead!

Wesley
Senior Trader for
World Class Trading Stars

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Hi Guys

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Today I added to our leaderboard the Cha Ching EA – which is a freebie. Expect a review from me tomorrow about this EA and where to get it.

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Have a Great Day

Tudor Ceban
www.mtchamps.com

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The Cable saw about 100 pips in gain over the holidays and has since given that back. Currently price is sitting right where it started on Friday’s open and is oversold on the 1 hour chart and has found support at 1.5800. At the moment there’s no divergence forming on this time frame that we can see.

On the four hour chart however, we were taken into a sell position at 1.5857. We were given a nice pullback that formed hidden bearish divergence and we also had our moving averages cross over into sell as added confirmation that we have the potential start of a new down trend. My indicators though are showing the Gbp to be very weak at the moment but we could see a bit of a pull back to the upside.

In the news today we don’t have anything until 12:45 pm when FOMC member Lockhart speaks and then at 7:01pm when the BRC Retail Sales Monitor. Both of these events are medium impact and can move the market so be careful during these times.

Good luck and safe trading

Josh
Senior Trader For
Profit Day Trading

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This morning I am looking at the USD/JPY 1 hour chart. This pair is still in a strong downtrend which started the 15th of March 2012. My system tells me that we could expect a nice pull back of about 60 plus pips. It could hit the target line at 81.800. Thereafter the trend could continue and maybe aim for another lower low. Stay alert and you could bank on another70 plus pips in the downward direction.

Remember, trade with your head and not your “gutfeel”.

Till next time.

Piet Swart
Forex Profit Coach

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