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BOJ could surprise the markets by applying negative interest rate

Discussion in 'Current Market Sentiments' started by fx-recommends, Jan 29, 2016.

  1. fx-recommends

    fx-recommends Content Contributor

    Aug 6, 2008
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    USDJPY Daily 29-01-2016 05-59-36 ص.jpg

    USDJPY could spike to 121.40 following BOJ's decision to lower the interest rate to -0.1%, after it has kept it unchanged at 0.1% since Dec. 19, 2008.

    BOJ said that the negative interest rate will work with the unchanged monetary base expansion pace by 80 trillion yen annually for achieving the price stability target of 2 percent at the earliest possible time. enhance

    BOJ said that it will introduce a multiple-tier system which some central banks in Europe have put in place adopting a three-tier system divided into a positive interest rate, a zero interest rate and a negative interest rate, respectively.

    BOJ could surprise the markets by today decision to apply negative interest rate driving USDJPY to extend its rebound from 115.96 to 121.40 which is the highest reached level since last Dec. 12, before retreating again to 119.30 area in a normal volatile reaction to the decision.

    The decision came after the release of Japan National CPI ex fresh foods which is the favorite gauge of inflation to BOJ. This figure came as expected and as the same as November rising by only 0.1% in December but Jan Tokyo CPI ex fresh foods which can be a clue to the next figure of Japan declined yearly by 0.1%, after rising by 0.6% in December.

    USDJPY daily Parabolic SAR (step 0.02, maximum 0.2) is reading now 116.36 in its sixth day of being below the trading rate, after rebound extension to 118.86 last Friday.

    USDJPY daily RSI is referring now to existence in the neutral region reading now 60.123, while its daily Stochastic Oscillator (5, 3, 3) which is more sensitive to the volatility is having now its main line in the neutral region but close to the overbought area above 80 reading 77.361, while its signal line is actually now in the overbought area reading now 81.524.

    Important levels: Daily SMA50 @ 120.34, Daily SMA100 @ 120.59 and Daily SMA200 @ 121.46


    S1: 117.64
    S2: 116.45
    S3: 115.96
    R1: 121.40
    R2: 123.74
    R3: 124.61

    Have a good day

    Walid Salah El din
    Senior Market Analyst
    Skype : chief.economist.walid

    Tel: UK. +44 1138590277
    Mob: EGY. +20 1224659143

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