News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
EUR/USD
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Oil - US Crude
Bullish
Wall Street
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
GBP/USD
Bullish
USD/JPY
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Real Time News
  • NASDAQ EXTENDS FALL, LAST DOWN ABOUT 2.1% Damn this Apple Watch is good... where Jay Powell at? https://t.co/8yXsJKehxy
  • France daily Covid cases rises above 13,000, highest since lockdown - BBG
  • GBP falling to fresh sessions lows following UK PM Johnson's warning that the UK is on the verge of having a second wave of Covid-19
  • Dow Jones pivots higher with the S&P 500 and Nasdaq owing to consumer sentiment data. Get your #indices market update from @RichDvorakFX here: https://t.co/MN3YH5WNMV https://t.co/ELJkNhn6LK
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 97.14%, while traders in NZD/USD are at opposite extremes with 70.68%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/wQSpYPp9wY
  • US equities drop to session lows as Speaker Pelosi states that she is sticking with demands for a $2.2 trillion stimulus bill
  • US #Dollar Outlook: $USD Grinds into Weekly Support – $DXY Levels - https://t.co/Teg9aN8GHQ https://t.co/bdifryFcSD
  • Commodities Update: As of 16:00, these are your best and worst performers based on the London trading schedule: Gold: 0.77% Silver: 0.39% Oil - US Crude: -0.08% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/4rXyUYBYzw
  • Forex Update: As of 16:00, these are your best and worst performers based on the London trading schedule: 🇳🇿NZD: 0.36% 🇯🇵JPY: 0.31% 🇪🇺EUR: 0.05% 🇨🇦CAD: -0.11% 🇨🇭CHF: -0.14% 🇬🇧GBP: -0.17% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/LZ5R3mMJhS
  • - 77% of adults say they are okay financially in June vs 72% in early April - Rate of layoffs is much higher among low-income families - 31% of workers do all work from home vs 41% in early April
Dovish BoJ to Continue Priming the Pump; Will JPY Respond?

Dovish BoJ to Continue Priming the Pump; Will JPY Respond?

2017-10-28 04:49:00
James Stanley, Strategist
Share:
Dovish BoJ to Continue Priming the Pump; Will JPY Respond?

Fundamental Forecast for JPY: Neutral

Talking Points:

The Yen put in a week of strength against most major currencies, running higher against the Euro, British Pound and Canadian and Australian Dollars. And while the Yen did weaken against what turned out to be a very strong U.S. Dollar, an area of resistance in USD/JPY tempered the top-side move, leaving the five-month old range in place ahead of next week’s Bank of Japan rate decision.

USD/JPY Weekly: Spinning Top at Resistance Keeps USD/JPY’s Five-Month Range Alive

Dovish BoJ to Continue Priming the Pump; Will JPY Respond?

Chart prepared by James Stanley

At next week’s meeting, there are few hopes for any actual moves. The one prospect of change on the horizon is a potential nudge-lower to near-term inflation forecasts. In a Bloomberg report earlier in the week, ‘people familiar with the Central Bank’s discussions’ implied that the BoJ may be considering a “small” cut to their inflation projections for this fiscal year, which ends in March of 2018. The current projection of 1.1% has started to look like quite the stretch: August saw inflation come in at a surprising .7%, but this was after four consecutive months of CPI coming in at a .4% clip in a year that saw inflation remain below .5% for a full twelve months.

The BoJ cutting inflation forecasts is becoming quite normal for the bank. They lasted nudged their forecast-lower in July, and this was the sixth time that the bank had pushed back their target for returning inflation to 2%; which they’re currently not expecting to happen until 2020. So, there is little expediency within the bank to investigate stimulus exit or tighter policy options, as the BoJ is still trying to foster an environment in which prices can rise at a faster rate for the aging nation. At the BoJ’s most recent rate decision, we saw little motivation for the BoJ to start looking at tightening; and we actually saw a dissenting vote looking for even more accommodation.

Against that trend of Yen weakness, we still have the brewing situation around North Korea. While fears around the further development of this scenario have started to recede behind the headlines, it would be unwise to completely discount the possibility of this re-emerging. The prior risks that were held around Japanese General Elections have dissipated after Shinzo Abe’s LDP carried a decisive win; and this opens the door for a continued backdrop of softness as driven by ‘ultra-loose’ monetary policy, as was at the center of Mr. Abe’s campaign along with BoJ Governor, Haruhiko Kuroda.

While the prospect of continued weakness on a dovish BoJ remains attractive, the lack of seller anticipation in a backdrop seemingly accommodative of such, as we had this week with USD-strength showing vividly, provides near-term questions around that scenario. Those questions can be soundly answered should Yen-sellers show up around or after next week’s BoJ meeting, but until then - the forecast for the Japanese Yen will be set to neutral for the week ahead.

--- Written by James Stanley, Strategist for DailyFX.com

To receive James Stanley’s analysis directly via email, please SIGN UP HERE

Contact and follow James on Twitter: @JStanleyFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES