Talking Points
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- In this webinar, we used price action to analyze major FX markets ahead of a major Central Bank decisions out of Japan, the United States and New Zealand.
- We first went over the Bank of Japan and the Japanese Yen, which we had also discussed this morning in the article, BoJ Preview: ‘Comprehensive Assessment’ to Set the Tone. At this meeting, the Bank of Japan has previously said that they were going to offer a ‘review’ of current monetary policy framework, and this could give markets an indication of how the BoJ may be looking to move moving forward. This could, potentially, open the door for another increase to their stimulus program; or it could highlight that the BoJ is looking to change the pace of their approach given the apparent diminishing marginal impact of additional QE.
- We started off by looking at the technical formation in USD/JPY, and given that tonight’s BoJ meeting presents an absolute risk, the longer-term support found around the ¥100.00-level could be appealing for top-side plays. We discussed the technical formation in yesterday’s Market Talk, and you’re certainly welcome to check that out by clicking on this link.
- We then moved around the Yen-complex in the effort of finding candidates for both Yen strength and Yen weakness. For Yen strength we looked at GBP/JPY, while for Yen weakness we looked at AUD/JPY, EUR/JPY and NZD/JPY.
- We also previewed tomorrow’s FOMC announcement, in which the general expectation appears to be for a recursion of last September’s FOMC announcement in which the bank posed a ‘hawkish hold’ scenario. Last year, stocks initially rallied on news of no rate hike, only to reverse aggressively as the Fed took on a hawkish stance towards hikes in the remainder of the year.
--- Written by James Stanley, Analyst for DailyFX.com
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