1. SUMMARY ON YEN AND JAPAN’S ECONOMY
• I hope this was a very good trading week for all of traders.
• The Yen was very weak in the previous week which is a reverse of what happened the week prior this one which is now good news for Japan.
• Japan couldn’t have asked for more in just one week.
• There is a saying that politics, economics and social issues or social activities are inseparable, and they influence each other heavily.
• As previously alluded to that the US presidential elections was going to be a high impact news event this past week and that there’ll be big movements expected within the markets this week.
• That really happened without a shadow of a doubt.
• The elections did not disappoint the traders.
• The gaps in almost all the Yen pairs might also have had a hand in the first big movements since they had to close even though we never knew when they were going to close.
• This happened in conjunction with the preliminary results which showed Donald Trump to be in the lead which happened around 03h00 S.A time.
• Immediately after the announcement of the results, the world leaders sent messages of congratulations and support to the US President elect Donald Trump (The Donald) including the Prime Minister of Japan Shinzo Abe.
• Most leaders (most countries) are hoping for a new or renewed relationships with the US including Japan.
• Prime Minster Abe has already secured a meeting with Mr. Trump this coming week on Thursday (17/11/2016) where he is on his way to Peru for an Asia Pacific Economic Cooperation Summit. For more reading on this meeting please click here
• This meeting happens in the face of a possible failure of the Japan-China Ministerial meeting which has been on the cards for a while since the beginning of the year.
• This is a meeting which is supposed to involve both these countries’ Ministers of Finance, foreign Affair and other important ministers. For more on this meeting please click here
• Japan might be a winner if things go accordingly as per “The Donald’s” pre-election campaign statements which were seen to be anti-China by many.
• This might be a beginning of unity against China where Japan might become more influential in Asia, but we still have to see how this plays out once the leaders meet and “The Donald’s” administration policies become clear and known.
• We still need to be on the lookout of the trilateral summit which involves Japan, China and South Korea which has been rescheduled previously for the 19-20 December 2016.
• This would be the first time both the leaders of China and South Korea visit Japan since their ascendance to power as Japan will be the chair of this summit. For more on this meeting please click here
• The outcomes of these meetings are very important to the Japanese economy.
• We need to take note and see as well how much damage if there is any done by a 6.2 earthquake around Japan’s coast and how this might affect this country’s economy. For more reading please click here
• Japan and India have signed a deal whereby Japan is to supply India with nuclear power production equipment, fuel and technology.
• This is also a big boost to the Japanese economy since the would be flow of money between these two countries and affect the Yen.
• This is fundamentally important for us to take note as traders in future. For more reading please click here
2. ECONOMIC CALENDAR AFFECTING THE YEN
• There were no high impact news for the Yen specifically except for other economies which definitely affected it.
• This is what transpired on the following activities affecting JPY:
2.1 Monetary Policy minutes for the meeting held on the 20-21 September 2013 were released. There was not a lot of things that we did know already as per previous documents that we have discussed. Generally the minutes were approved by the Monetary Policy Board meeting held on 31October – 01 November 2016. Issues discussed included summary of reports on economic and financial developments, money market operations in the intermeeting period, recent developments in oversea and financial markets, amounts of Exchange Traded Funds (ETF’s), Qualitative and Quantitative Monetary Easing (QQE), Yield curve control etc. For in-depth reading of the minutes please click here
The average cash earnings are reported higher by 0.2%
2.2 China’s trade balance is up by 47 Billion Yuans. For more information please click here
There was an auction of the 10 Year Japanese Government Bonds (JGB’s) which expires on 20 September 2026. For more please click here
The leading indicators are down by 0.4%.
Japan’s current account is lower by 0.5Trillion Yens. For more please click here
Bank lending up by 0.2%. For more please click here
2.3 Economy watchers’ sentiments are higher by 1.4%
2.4 Core machinery orders are lower by 1.1%. The M2 Money stock is higher 0.5%.
The 30 Year Bonds (JGB’s) auction’s bid to cover ratio is less by 0.1 from the previous one at the same interest rate of 0.51%. They expire in September 2046. This implies that there is a slight decline of interest in the 30 Year bond market. For more information please click here
Preliminary machine tools orders are lower by 2.6%.
2.5 PPI is down by 0.5%. The tertiary industry activity is also down by 0.1% as expected from the forecast.
3. TECHNICAL SUMMARY
• JPY’s performance this past week against other major currencies was very weak with big movements from either extremes of the Pivot points i.e from resistance levels (WR2 and WR3) to the support levels (WS1, WS2 and WS3) and back to the weekly and in some cases monthly resistance levels.
• Even though the movements were big but they were not as big as the BREXIT movements comparatively.
BREAKDOWN OF JPY’s PERFORMANCE AND POSSIBLE PIPS IN JUST TWO (2) DAYS i.e 09-10 NOV. 2016 FOR BOTH YEN BULLS AND BEARS
N.B: Yen Bulls sell other currencies which are the base and the Yen Bears buy other currencies where yen is always the quote currency.
• USD/JPY was VERY WEAK. It opened at 103.990 and closed at 106.725 on Friday .
09 Nov: Yen Bulls 426 pips and 09-10 Nov: Yen Bears 578 pips
• GBP/JPY was EXTREMELY WEAK. It opened at 129.556 and closed at 134.446. As per the weekly forecast it shot up to WR2. It sliced through it like a hot knife through butter to WR3 as well and hit MM4.
09 Nov: Yen Bulls 372 pips and 09-10 Nov: Yen Bears 778 pips
• EUR/JPY was WEAK. It opened at 114.959 and closed at 115.767. As per the weekly forecast it also shot up and hit WR2.
09 Nov: Yen Bulls 224 pips and 09-10 Nov: Yen Bears 286 pips
• CAD/JPY was WEAK. It opened at 77.868 and closed at 78.788.
09 Nov: Yen Bulls 467 pips and 09-10 Nov: Yen Bears 414 pips
• NZD/JPY was VERY WEAK. It opened at 76.368 and closed at 76.020.
09 Nov: Yen Bulls 420 pips and 09-10 Nov: Yen Bears 361 pips
• AUD/JPY was VERY WEAK. It opened at 79.891 and closed at 80.510.
09 Nov: Yen Bulls 515 pips and 09-10 Nov: Yen Bears 506 pips
• CHF/JPY was VERY WEAK. It opened at 106.335 and closed at 108.00.
09 Nov: Yen Bulls 197 pips and 09-10 Nov: Yen Bears 275 pips
• NIKKEI was UP. It opened at 17 157.98 and closed at 17 407.68.
09 Nov: Yen Bulls 11 988 pips and 09-10 Nov: Yen Bears 14 544 pips
N.B: NIKKEI behaves almost exactly like USD/JPY in terms of movement.
• It is on these basis why I say it must have been a good trading week for everyone.
• If not, our sympathy to you and surely one should have learned something on that experience.