31 Oct 2013
USD/JPY tumbles on Nikkei decline, less dovish FOMC
FXstreet.com (Athens) – The USD/JPY is trading under pressure the last couple of hours as traders maybe are in process of rethinking the US taper timing.
USD/JPY downwards as BoJ offers little change, Nikkei sharp fall; FOMC makes markets rethink of taper timing
The USD/JPY is hovering around 98.24 area (near its daily lows as of 98.21), after having hit a daily high in Asian trading session (98.55), while post- BoJ announcement dropped instantly a bit by 10 pips (98.45). Traders should mostly pay focus on the fact that the cross lost the sharp uptrend momentum that achieved yesterday after the release of the FOMC statement which boosted the American dollar, sending the cross to 98.66 area. Briefly, apart from the unanimous BoJ decision to keep its monetary policy unchanged, as widely expected, the Japanese construction orders, as well as the Annualized Housing Starts were released at much better levels than forecasted, giving credit to the “Abenomics”. What’s more, BoJ’s Kuroda, mentioned through news wires that “Japanese growth to keep exceeding potential. ECB swap line extension is to suppress uncertainties,” and that “2% inflation target likely in latter half of projection period.” One major reason that investors could attribute the cross fall is that Nikkei closed down 1.20% and as it is widely known there is an immense inverse correlation between Nikkei and the Japanese currency. Looking behind the curtains, taken for granted that Fed is data dependent, market investors should take a careful look on the NFP data next week, to consider if the modest probability of Fed tapering on December can be a reality.
Technical Aspects on the USD/JPY
Karen Jones Head Technical Analyst of Commerzbank, mentions that the “USD/JPY the slow grind higher remains in force and the market continues to rebound from its 4 month support line at 97.07. This guards the current October low at 96.55 and the six month support line at 96.02. The market has been contained in a large contracting range for the past 6 months and currently we have no real indication that the market is ready to break out of this range.
Rallies will find resistance at 99.01/06 a recent high and Fibonacci retracement. We have a resistance line above here at 99.21 and again at 99.91.”
USD/JPY downwards as BoJ offers little change, Nikkei sharp fall; FOMC makes markets rethink of taper timing
The USD/JPY is hovering around 98.24 area (near its daily lows as of 98.21), after having hit a daily high in Asian trading session (98.55), while post- BoJ announcement dropped instantly a bit by 10 pips (98.45). Traders should mostly pay focus on the fact that the cross lost the sharp uptrend momentum that achieved yesterday after the release of the FOMC statement which boosted the American dollar, sending the cross to 98.66 area. Briefly, apart from the unanimous BoJ decision to keep its monetary policy unchanged, as widely expected, the Japanese construction orders, as well as the Annualized Housing Starts were released at much better levels than forecasted, giving credit to the “Abenomics”. What’s more, BoJ’s Kuroda, mentioned through news wires that “Japanese growth to keep exceeding potential. ECB swap line extension is to suppress uncertainties,” and that “2% inflation target likely in latter half of projection period.” One major reason that investors could attribute the cross fall is that Nikkei closed down 1.20% and as it is widely known there is an immense inverse correlation between Nikkei and the Japanese currency. Looking behind the curtains, taken for granted that Fed is data dependent, market investors should take a careful look on the NFP data next week, to consider if the modest probability of Fed tapering on December can be a reality.
Technical Aspects on the USD/JPY
Karen Jones Head Technical Analyst of Commerzbank, mentions that the “USD/JPY the slow grind higher remains in force and the market continues to rebound from its 4 month support line at 97.07. This guards the current October low at 96.55 and the six month support line at 96.02. The market has been contained in a large contracting range for the past 6 months and currently we have no real indication that the market is ready to break out of this range.
Rallies will find resistance at 99.01/06 a recent high and Fibonacci retracement. We have a resistance line above here at 99.21 and again at 99.91.”