Dear trading community, my apologies with the past uploads with no charts, links etc. I seem to have had technical problems. This was supposed to be the previous week’s overview but now since we are in the new week there is an addition of this week’s forecast.
• The last week of October saw the JPY having a mixed performance against other major currencies, but generally we could say it has been weak against them except for CAD where there was a bit of a range.
• This might be because of the OIL which has been falling for the better part of the week from around 51.08 to 48.6.
• The weakness might be because of various factors since JPY is a quote currency and also becomes reactionary in most instances since there were no high impact news affecting it this month except the BOJ Govenor’s speech.
• The JPY was gaining a little bit of strength towards the market closure especially against the greenback.
• There was a shock about the big drop in the USD of Friday 28/10/2016.
• There are two (2) possibilities to this drop even though the drop did not mean that the USD has lost its dominance over the JPY.
• This might have been caused by the market’s reaction towards the Hilary Clinton’s FBI investigation announcement. It might also be that this was the last Friday of the month and there was a lot of profit taking before the weekend even though the last day of the moth is only on Monday (31/10/2016).
• Both of them could have resulted in that drop.
• The 10 Year Japanese Government Bond (JGB) has been falling from 0.65% around February 2014 to -0.07% from its lowest at -0.29% on Friday.
• The combination of the interest rate policy introduced by the BOJ in January 2016 together with the JGB purchases using Quantitative and Qualitative Monetary Easing (QQE) has pushed down the short and long term interest rates. BOJ QQE
2. TECHNICAL SUMMARY
2.1 PAST WEEK (24-28/10/2016)
• NIKKEI this past week was rallying as it opened at 17 446.41 and closed at 17 243.42 on Friday (28/10/2016).
• The following are also the opening and closing prices for these currency pair which include the JPY
• USD/JPY opened at 103.839 and closed higher at 104.721 and also reaching a high of 105.532
• GBP/JPY opened at 126.898 and closed higher at 127.661
• EUR/JPY opened at 112.985 and closed higher at 115.011
• CAD/JPY opened at 77.906 and closed higher at 78.229 and reaching a high of 78.964 and its lowest being 77.806
• NZD/JPY opened at 74.288 and closed higher at 74.957 and reaching a high of 75.383
• AUD/JPY opened at 79.063 and closed higher at 79.574 and reaching a high of 80.145.
• CHF/JPY opened at 104.355 and closed higher at 106.026
2.2 THIS WEEK’S FORECAST (31/10/2016 – 04/11/2016)
• The economic calendar for this coming week seems to be very exciting with great news and data expected.
• 31/10/2016: Preliminary Industrial Production has already came out dropping from 1.3% to 0.9%.
• Retail Sales got stronger with a 0.3% improvement moving from -2.2% to -1.9%.
• Housing statistics saw a big improvement of 7.5% surpassing the forecast of 5.3% from 2.5% to 10.0%.
• Tuesday (01/11/2016): we are expecting the release of the final manufacturing PMI as well as CNY news which might affect this currency.
• The following are be high impact news expected on Tuesday:
• BOJ Outlook report.
• BOJ Policy rate which is also expected to remain the same at -0.10%.
• There is also BOJ Monetary Policy Statement.
• BOJ Press conference
• Wednesday (02/11/2016): Monetary Base and consumer confidence
• Thursday (03/11/2016): is a bank holiday.
• Friday (04/11/2016): seems not to have any news for the JPY.
• There is a possibility of a continuation of last week’s performance, but we really need to watch the data that will come out this week how they will affect this currency.
• Kindly note that this week’s opening prices are not necessarily last week’s closing.
• USD/JPY opened at 104.576 around WPP.
• GBP/JPY opened at 127.421 around WPP.
• EUR/JPY opened at 114.867 below WM3.
• CAD/JPY opened at 77.986 around WM2.
• NZD/JPY opened at 74.834 just above WPP.
• AUD/JPY opened at 79.423 between WPP and WM2.
• CHF/JPY opened at 105.881 which is around WM3.
3. COT REPORT
• The COT Report also shows that there is a decline in long positions for the JPY for the past two (2) weeks despite having more numbers than the short positions. It also shows that there is a rise in the short positions for the past for weeks. COT Report
• Earlier at the beginning of the month we saw Tankan Manufacturing Index (Business Short-Term Economic Sentiment Survey in Japan) remaining the same at 6 from the previous one. BOJ Manufacturing Index
5. SERVICES SECTOR
• Service Producer Price index (SPPI) or Corporate Service Price Index (CSPI) on Wednesday 26/10/2016 was 0.3% from the previous 0.2%. BOJ Statistics
• We also saw Tankan Non-manufacturing Index (overall conditions of the services industry in Japan) going down from 19 to 18 from the previous one. BOJ Stats
• In his speech, the governor of the Bank of Japan (BOJ) also popularly known as Nichigin on the 21/10/2016 at the Japan Summit which was hosted by the economists , there was an emphasis made on the three (3) challenges which face the Japan’s labour market which are technological innovation, globalization as well as labour market’s transformation in response to demographic change in Japan including women. BOJ Press
• The unemployment rate improved with a 0.1% from 3.1% to 3.0%.
• Bank lending showed an improvement from 2.0% to 2.2% also surpassing the forecast 2.0%. BOJ Bank lending
• We saw Japan’s Current Account moving from 1.45T surpassing the forecast 1.58T recording 1.98T. This is a report from the Ministry of Finance Japan. BOJ Current Account
• Japan’s interest rate still remains the same at -0.1%. Japan’s data
• The GDP growth rate is 0.2% which is far from the 2% which was the target when introducing Quantitative and Qualitative Monetary Easing (QQE) in April 2013. This is the general tendency in the world economies not only in Japan of slow growth or other economies no growth at all. Japan’s GDP
• This past week we saw an improvement in household spending which moved from -4.6% to -2.1% as reported by the statistics bureau. Household spending
• The Tokyo core CPI also strengthened from -0.5% to -0.4%.
• BOJ’s core CPI on Friday 28/10/2016 was reported to be from 0.4% to 0.2%.
• The National core CPI remained the same at -0.5%.
• Trade balance declined with 0.01T and was reported as 0.35T from the previous 0.36T. Trade Balance