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Yen strengthens as BOJ stands pat , UK retail sales in focus

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Nov 19, 2015.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
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    FXStreet (Mumbai) - The Bank of Japan (BOJ) monetary policy decision turned out to be a non-event as widely expected, although did help to spur some fresh demand for the yen. While the technical correction witnessed in the greenback across the board along with recovery in commodities sprung back life into the commodity-currencies.

    Key headlines in Asia

    Japan Adjusted Merchandise Trade Balance rose from previous ¥-355.7B to ¥-202.3B in October

    BOJ: Some data show weak developments in inflation expectations

    NYSE to eliminate stop loss orders

    Dominating themes in Asia - centered on JPY, AUD, NZD

    Broad based US dollar retreat was the main theme in Asia, with all the majors benefitting from the FOMC-minutes induced correction in the buck. USD/JPY faced double whammy this session, with the yen strengthening after BOJ left policy on-hold today. At the moment, the major trades around 123.20, retreating slightly from lows reached at 123.10 levels. Among other majors, the EUR/USD pair gained 0.45% and finally broke through 1.07 barrier while GBP/USD trades within a shouting distance of 1.53 handle.

    While the Antipodeans posed a solid rebound and rallied almost 1 big figure from pre-FOMC minutes levels. The AUD/USD pair rises 0.85% to 0.7170 as bulls rejoice the recovery in the commodity prices amid a broadly lower USD. While the NZD bulls ride higher on the impressive NZ PPI data also boosted the sentiment around the Kiwi. New Zealand's Producer Price Index (PPI), rose 1.3% in Q3, following a decline of 0.2% in the April-June period.

    The Asian stocks trade firmer, with Japan’s benchmark, the Nikkei paring gains post-BOJ and now trades +1.14% to 19,873 while mainland China’s benchmark, the Shanghai Composite trades muted around 3,566 points while Australia’s S&P ASX index advances 2% to 5,235. Hong Kong’s Hang Seng rallies 1.17% to 22,450.

    Heading into Europe & the US

    The German Bundesbank President’s speech to kick-off an eventful EUR calendar ahead, followed by the retail trade data from the UK and the ECB monetary policy meeting accounts.

    The UK retail sales are expected to drop 0.1% m/m in Oct compared to 1.9% growth reported in Sept and rise 4.6% y/y following a 6.5% gain booked previously. While the ECB will publish the minutes of its October 22 monetary policy meeting in Malta.

    Apart from data, we have a slew of ECB board members speeches lined up in the session ahead. ECB board member Benoit Coeure will deliver opening address at the ECB conference and policy workshop. ECB board member Peter Praet is scheduled to deliver a keynote speech in Frankfurt, Germany.

    Moving on to the NY session, we have a set of significant US economic data to be reported – the weekly jobless claims and the Philly Fed manufacturing index. While FOMC member Lockhart is due to speak in Atlanta.

    EUR/USD Technicals

    Valeria Bednarik, Chief Analyst at FXStreet noted, “Technically, the pair's 4 hours chart shows that the price is developing below a bearish 20 SMA whilst the technical indicators are advancing from oversold levels, but remain well below their mid-lines. The upward corrective movement can extend on a rally beyond 1.0690, although the risk remains towards the downside, and selling interest will likely surge on advances up to the 1.0750 region. Support levels: 1.0620 1.0585 1.054 Resistance levels: 1.0690 1.0720 1.0750.”
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