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The after holding above 120, USD could rebound for trading near 120.50 again

Discussion in 'Current Market Sentiments' started by fx-recommends, Dec 28, 2015.

  1. fx-recommends

    fx-recommends Content Contributor

    Aug 6, 2008
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    USDJPY Daily 28-12-2015 06-41-30 ص.jpg
    After being exposed to down side pressure by the end of last week, USDJPY has opened the new week trading on an upside gap at 120.21, before rising to 120.53, after the release of dovish Japanese retail sales data.

    The Japanese retail trade of November came by the first session of this week to show yearly decreasing by 1%, after rising by 1.8% in October with monthly seasonally adjusted falling by 2.5% following increasing by 1.1% in October and also the Nov Japanese Large Retailers' sales came disappointing rising by only 2%, after increasing in October by 2.9%.

    These weak consuming data came as a result of the economic slowdown and the continued pressure on the consuming spending because of the sales taxes rising by 3% to 8% in the beginning of April 2014 which could add to the inflation annual scale about 1.7%, before diminishing with the release of April 2015 inflation figures.

    By last weekend, Nov Overall Household Spending in Japan has come also to highlight this weakness by retreating by 2.9% y/y, while the market waiting for decreasing by only 2.4% as the same as October.

    Nov National CPI ex fresh foods which is the favorite gauge of inflation to BOJ came also to show rising by 0.1%, while the consensus was referring to no yearly change after declining by 0.1% in October, September and August, While BOJ is expecting reaching its 2 yearly inflation goal in the second half of 2016 financial year, after it has been expecting that to be reached in the first half of 2016.

    From its side to support the economy, the Japanese ruling cabinet approved record ¥96.7tr budget for 2016 fiscal year getting use of the energy prices slide which lowered the pressure on the Japanese budget and gave it leeway to sustain its financial situation and support the economy.

    It is similar step to what it has done by the end of last year by unfolding a stimulating plan worth ¥3.5tr for the current financial year.

    USD JPY ability to hold above 120 psychological level helped it to rebound in the beginning of this week and now, it is having its second day of being above its H4 Parabolic SAR (step 0.02, maximum 0.2) which is reading now 120.06, after 32 H4 of consecutive being below it since Dec. 18 when BOJ decided to keep again its monetary base annual expansion by ¥80tr yearly as it has been since Oct. 31, 2014 maintaining the interest rate at 0.1% as it has been since December 2008 with extension of BOJ's average maturity holding of JGB to 7-12 years from 7-10 years.

    While USDJPY falling to 120.05 is still placing its daily Parabolic SAR (step 0.02, maximum 0.2) above its trading rate for the third day in a row to read today 123.34.

    So, despite the recent rebound which enhanced the pair view over the short term, the pair is still depressed over longer term, after ending side way of trading between 121.21 and 123.74 by breaking its lower band at 121.21

    Important levels: Daily MA50 @ 121.94, Daily MA100 @ 121.27 and Daily MA200 @ 121.60


    S1: 120.05
    S2: 119.60
    S3: 118.05
    R1: 121.48
    R2: 123.54
    R3: 123.74

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

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

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