By FXEmpire.com
Introduction: In the USD/JPY trade, trying to pick tops or bottoms during that time would have been difficult. However, with the bull trend so dominant, the far easier and smarter trade was to look for technical opportunities to go with the fundamental theme and trade with the market trend rather than to trying to fade it.
Against the Japanese yen, whose central bank held rates steady at zero, the dollar appreciated 19% from its lowest to highest levels. USD/JPY was in a very strong uptrend throughout the year, but even so, there were plenty of retraces along the way. These pullbacks were perfect opportunities for traders to combine technicals with fundamentals to enter the trade at an opportune moment.
- The interest rate differential between the Bank of Japan(BoJ) and the Federal Reserve
- Japanese government intervention to maintain their currency sends USD/JPY lower
Weekly Analysis and Recommendation:
The USD/JPY ended the week at 80.27 as the USD fell against most of its trading partners after a fall in the expected GDP rate and renewed hopes of more monetary easing by the Fed.
|
Date |
Open |
High |
Low |
Change % |
|
|
Apr 27, 2012 |
80.27 |
81.07 |
81.44 |
80.22 |
-0.99% |
|
Apr 26, 2012 |
81.07 |
81.32 |
81.42 |
80.67 |
-0.31% |
|
Apr 25, 2012 |
81.32 |
81.40 |
81.69 |
81.08 |
-0.10% |
|
Apr 24, 2012 |
81.40 |
81.09 |
81.44 |
80.86 |
0.38% |
|
Apr 23, 2012 |
81.09 |
81.60 |
81.60 |
80.97 |
-0.62% |
The Japanese yen weakened after the Bank of Japan said it would expand its asset-purchase program by 5 trillion yen ($61.88 billion), while keeping interest rates on hold as expected with the dollar jumping well above the ?81 level, before fading back to ?80.85. The greenback had traded at ?80.94 in late North American trading Thursday.
Japan’s been in a deflationary cycle for 20 years. … Getting out of that psychologically as an investor and believing that Japan is going to turn it around is difficult to do, so the market has been skittish.
Earlier in the day, investors had sifted through a batch of Japanese data released just before the market open, including a weaker-than-expected rise in industrial production but a surprise jump in retail sales, ahead of the central bank decision.
At the same time, the BOJ said the year-on-year change in inflation is gradually expected to rise above 0.5% but remain less than 1%, and that it likely won’t be long before price increases reach its goal of 1% in the “medium to long term.”
Major Economic Events for the past week actual v. forecast
|
Core Retail Sales (MoM) |
0.5% |
1.0% |
-0.8% |
|
|
USD |
New Home Sales |
328K |
320K |
353K |
|
GBP |
GDP (QoQ) |
-0.2% |
0.1% |
-0.3% |
|
GBP |
GDP (YoY) |
0.0% |
0.3% |
0.5% |
|
USD |
Core Durable Goods Orders (MoM) |
-1.1% |
0.5% |
1.9% |
|
USD |
Interest Rate Decision |
0.25% |
0.25% |
0.25% |
|
NZD |
Interest Rate Decision |
2.50% |
2.50% |
2.50% |
|
USD |
Initial Jobless Claims |
388K |
375K |
389K |
|
USD |
GDP (QoQ) |
2.2% |
2.5% |
3.0% |
Economic Highlights of the coming week that affect the Yuan, Yen, Aussie and Kiwi
|
Sun Apr 29 |
9:00pm |
NZD |
NBNZ Business Confidence |
33.8 |
|
|
Mon Apr 30 |
9:00pm |
CNY |
Manufacturing PMI |
53.6 |
53.1 |
|
Tue May 1 |
12:30am |
AUD |
Cash Rate |
4.00% |
4.25% |
|
12:30am |
AUD |
RBA Rate Statement |
|||
|
10:00am |
USD |
ISM Manufacturing PMI |
53.0 |
53.4 |
|
|
Wed May 2 |
8:15am |
USD |
ADP Non-Farm Employment Change |
179K |
209K |
|
6:45pm |
NZD |
Employment Change q/q |
0.5% |
0.1% |
|
|
6:45pm |
NZD |
Unemployment Rate |
6.2% |
6.3% |
|
|
Thu May 3 |
8:30am |
USD |
Unemployment Claims |
382K |
388K |
|
10:00am |
USD |
ISM Non-Manufacturing PMI |
55.5 |
56.0 |
|
|
9:30pm |
AUD |
RBA Monetary Policy Statement |
|||
|
Fri May 4 |
8:30am |
USD |
Non-Farm Employment Change |
176K |
120K |
|
8:30am |
USD |
Unemployment Rate |
8.2% |
8.2% |
Upcoming Government Bond Auctions
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Originally posted here
