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 Friday 22 April 2016

PM Bulletin: Big move in USDJPY

 

 

Here’s a four-hour chart of the USDJPY which shows todays surge back above 110.00




     
    
What is also of interest is that at the time of writing the pair is trading above resistance just below 111.00. This area marks the 0.24 Fibonacci retracement of the Feb-April 2015 sell-off. I’ve marked the three occasions when it has most recently acted as support.

There’s been increasing speculation that additional monetary stimulus will be forthcoming at this week’s Bank of Japan (BOJ) meeting. A string of weak economic data releases, together with the earthquakes which struck a southern manufacturing hub last week could give the BOJ all the excuses it needs to provide further monetary easing. The BOJ is said to be considering applying negative rates to its institutional lending programme. In other words, banks will be “paid” for taking loans. This comes on top of speculation that the central bank will double the pace of its ETF purchases.

But there is a feeling that such measures are proving increasingly ineffective. The danger for Thursday is that the yen resumes its rally even if the central bank loosens monetary policy further. This would mean that investors have lost confidence in the BOJ’s ability to stimulate Japan’s economy. This could create a crisis not just for the BOJ but for central banks in general.



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Posted by David Morrison

Tagged: Bulletin PM

Category: PM Bulletin


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