The Yen kept on getting stronger generally in the previous week which is what Japan does not really need as an exporting economy. With the upcoming US elections, there might be big movements within the markets this week since this is a very high impact news event which involves the world reserve currency. Traders need to be very careful of this and have only have two (2) options i.e avoid trading on the election day or trade very cautiously during and immediately after the event especially the results. With less than 48 hours to this event, this week the market has opened up with big gaps in almost all the Yen pairs. This might be good for the Yen because these gaps are in the direction which weakens it. One other thing noted is that the gap also occurred in oil as well.
2. BIAS ON JPY
BEAR (sometimes short term Bull). I’m a BEAR because of the following reasons:
The Nikkei has been rallying since June after BREXIT, and if this trend continues as it did at the opening of this week with the gap also this might be a good sign for the Yen weakness. Even though it has been a rollercoaster ride for the Yen where it has been stronger, but it has generally been weak if one looks at all the pairs involving it after BREXIT. There are also possible signs of reversal patterns like double and triple bottoms, lower highs as well as the 21/55 EMA crosses to the upside signaling Yen weakness in many of the Yen pairs.
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.
• There seems to be a decline in the net noncommercial positions. For the report please click here
4. ECONOMIC CALENDAR AFFECTING THE YEN
This coming week does not seem like we are having high impact news for the JPY specifically except for other economies which might affect it.
It is only low and medium impact news.
We are expecting the following activities which have an impact on the JPY:
4.1 MONDAY (07/11/16): Monetary Policy Minutes, as well as the average cash earnings which are expected to be higher
4.2 TUESDAY (08/11/16): China’s trade balance which is high impact news and might affect the Yen. The 10 Year Japanese Government Bonds (JGB’s) auction. There’s leading indicators which are expected to be down. Even though this is in another country but the US elections are high impact news and might affect this currency either way depending on the outcome.
4.3 WEDNESDAY (09/11/16): Economy watchers’ sentiments are expected to be lower which might be negative towards this currency. This is a survey which covers seven (7) regions’ economic trends within the country.
4.4 THURSDAY (10/11/16): BOJ Summary of opinions, Core machinery orders which are expected to be up. The M2 Money stock is expected to remain the same. The auction of 30 Year JGB’s. There are also Preliminary machine tools orders which are expected to be higher. If this is true it might be good for this currency if one considers the micro-economics of Japan.
4.5 FRIDAY (11/11/16): We are waiting for the PPI or the CGPI which the forecast says it might be high. The tertiary industry activity is expected to be down.
5. TECHNICAL SUMMARY
Based on the following reasons:
(a) With the USD being weaker against the JPY this past week.
(b) The NFP figure which was not good.
(c) No high impact news except the US election.
(d) There is also a Bank holiday on Friday in the US.
There might also be an up and down movement of the dollar against the Yen this week, we just have to monitor what the election outcomes are really and how they will affect the dollar which automatically will affect the Yen.
USD/JPY opened at 103.990 between WPP and WM3.
GBP/JPY opened at 129.556 which is also at WM3 and might probably head up to WR2.
EUR/JPY opened at 114.959 which is also at WM3 and might probably head up to WR2.
CAD/JPY opened at 77.868 between WPP and WM3.
NZD/JPY opened at 76.368 between WM3 and WR1.
AUD/JPY opened at 79.891 between WPP and WM2.
CHF/JPY opened at 106.335 between WPP and WM2.
Kindly take note of the above information as well as the Nikkei charts below in order to make a decision this week if you want to trade the Yen in combination with any other currency of your choice taking into consideration what other news might impact that currency as well.