Forex Blog

April 17, 2014

BOJ Still Optimistic About Regional Economies Says Sales Tax Effect Will Not Last

The Bank of Japan maintained its upbeat view on most of the country’s regional economies, adding to reassurances from its governor that the world’s third-largest economy can ride out the pain from a sales tax hike without additional stimulus.

Also on Thursday, a Reuters survey showed manufacturers were more confident about business conditions in April and saw a more moderate dip over the next three months, suggesting the damage from the tax hike may be less pronounced than thought.

The optimism may add to a growing consensus in financial markets that the central bank will hold off on easing policy until around July to spend more time scrutinizing the impact from the April 1 tax hike on domestic consumption.

In a quarterly report analyzing nine regional sectors of Japan, the BOJ raised its assessment for one and left unchanged its view for the rest to say they are all recovering moderately. None of the regional assessments were revised down.

“Domestic demand has been firm, production has been rising moderately as a trend, while job markets and income conditions have been improving,” according to the report compiled at a meeting of the central bank’s regional branch managers.

via Reuters

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USD/JPY – Muted Response to Sharp Unemployment Claims

The Japanese yen is trading quietly in Thursday trading, as USD/JPY trades slightly above the 102 level. In economic news, US Unemployment Claims were solid and easily surpassed expectations. In Japan, BOJ Governor Haruhiko Kuroda spoke at an event in Tokyo. Consumer Confidence continues to drop and Tertiary Industry Activity will be released later in the day.

In the US, Unemployment Claims had another strong release, coming in at 304 thousand. This was well below the estimate of 316 thousand, and marked the second straight week that the key indicator beat the estimate. With the Federal Reserve saying that further trims to QE will depend on the health of the employment market, employment numbers have taken on added significance.

On Wednesday, Federal Reserve chair Janet Yellen said that there is little inflationary pressure on the economy, and it was unlikely that the Fed’s inflation target of 2% would be met. She added that although the economy has showed signs of recovery, unemployment remains a sore spot. The Fed has abandoned its promise to maintain interest rates at least as long as the unemployment rate is above 6.5%, but the dovish stance we are seeing from Yellen means that a rate hike is unlikely in the near future.

Tensions between East and West continue over the volatile situation in Ukraine. There have been several skirmishes between pro-Russian militiamen and Ukrainian forces, and casualties have been reported on both sides. Secretary of State John Kerry and his Russian counterpart are meeting on Thursday, but a quick resolution is unlikely. Western Europe is dependent on Russian oil and gas, so we could see some market movement as the crisis continues.

 

USD/JPY for Thursday, April 17, 2014

Forex Rate Graph 21/1/13

USD/JPY April 17 at 13:15 GMT

USD/JPY 102.14 H: 102.27 L: 101.87

 

USD/JPY Technical

S3 S2 S1 R1 R2 R3
99.57 100.00 101.19 102.53 103.07 104.17

 

  • USD/JPY edged higher in Asian trading and crossed above the 102 line in the Europe session.
  • On the upside, 102.53 continues to provide resistance.
  • 101.19 is a strong support level.
  • Current range: 101.19 to 102.53

Further levels in both directions:

  • Below: 101.19, 100.00, 99.57 and 98.97.
  • Above: 102.53, 103.30, 104.17, 105.70 and 106.85.

 

OANDA’s Open Positions Ratio

USD/JPY ratio is made up of a strong majority of long positions, indicating trader bias towards the dollar moving upwards.

The yen has been trading close to the 102 line on Thursday. USD/JPY has edged higher in the European session.

 

USD/JPY Fundamentals

  • 00:30 BOJ Governor Haruhiko Kuroda Speaks.
  • 12:30 US Unemployment Claims. Estimate 316K. Actual 304K.
  • 14:00 US Philly Fed Manufacturing Index. Estimate 9.6 points. 
  • 14:30 US Natural Gas Storage. Estimate 35B.
  • 5:00 Japanese Consumer Confidence. Estimate 40.2 points. Actual 37.5 points.
  • 23:50 Japanese Tertiary Industry. Estimate 0.2%.

 

*Key releases are highlighted in bold

*All release times are GMT

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

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Gold Trading At $1300 As Unemployment Claims Shine

Filed under: OANDA News — Tags: , , , , , , , , , — admin @ 1:02 pm

Gold prices are steady on Thursday, as the spot price is just above the key $1300 level late in the European session. In economic news, US Unemployment Claims were steady and beat the estimate. Later in the day, we’ll get a look at another key event, with the release of the Philly Fed Manufacturing Index.

In the US, Unemployment Claims had another strong release, coming in at 304 thousand. This was well below the estimate of 316 thousand, and marked the second straight week that the key indicator beat the estimate. With the Federal Reserve saying that further trims to QE will depend on the health of the employment market, employment numbers have taken on added significance.

The US dollar is broadly lower following dovish comments by Federal Reserve chair Janet Yellen on Wednesday. Yellen said there is little inflationary pressure on the economy, and it was unlikely that the Fed’s inflation target of 2% would be met. She added that although the economy has showed signs of recovery, unemployment remains a sore spot. The Fed has abandoned its promise to maintain interest rates at least as long as the unemployment rate is above 6.5%, but the dovish stance we are seeing from Yellen means that a rate hike is unlikely in the near future.

Tensions between East and West continue over the volatile situation in Ukraine. There have been several skirmishes between pro-Russian militiamen and Ukrainian forces, and casualties have been reported on both sides. Secretary of State John Kerry and his Russian counterpart are meeting on Thursday, but a quick resolution is unlikely. Western Europe is dependent on Russian oil and gas, so we could see some market movement as the crisis continues.

 

XAU/USD for Thursday, April 17, 2014

Forex Rate Graph 21/1/13

XAU/USD April 17 at 12:50 GMT

XAU/USD 1300 H: 1304 L: 1296

 

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1241 1260 1273 1315 1330 1355

 

  • XAU/USD is steady in Thursday trade. The pair touched a high of 1304.15 in the European session.
  • 1273 is providing strong support. This line has remained intact since mid-February.
  • 1315 is the next resistance line. This is followed by key resistance at 1330.
  • Current range: 1315 to 1330

Further levels in both directions:

  • Below: 1273, 1260, 1241 and 1215
  • Above: 1315, 1330, 1355, 1388 and 1403

 

OANDA’s Open Positions Ratio

XAU/USD ratio has a substantial majority of long positions, reflecting a strong trader bias towards gold moving higher against the dollar.

Gold is steady in Thursday trading, as the pair hovers close to the $1300 line.

 

XAU/USD Fundamentals

  • 12:30 US Unemployment Claims. Estimate 316K. Actual 304K.
  • 14:00 US Philly Fed Manufacturing Index. Estimate 9.6 points. 
  • 14:30 US Natural Gas Storage. Estimate 35B.

*Key releases are highlighted in bold

*All release times are GMT

 

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This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

The post Gold Trading At $1300 As Unemployment Claims Shine appeared first on MarketPulse.

April 16, 2014

Kuroda Continues to Be Upbeat About Japanese Economy

Bank of Japan Governor Haruhiko Kuroda on Wednesday affirmed the central bank’s upbeat view of the economy, even as global financial markets wobble, stressing that growth will pick up around mid-year as the sting of a sales tax hike fades.

Price rises will broaden as the economy continues to improve gradually, Kuroda added, reiterating his view that Japan is making headway towards the central bank’s price goal of 2 percent inflation in about a year’s time.

“It’s true (the tankan survey published earlier this month) showed a wide range of companies, especially among auto makers and retailers, holding a more cautious view about the economic outlook,” Kuroda told a parliamentary session.

“But the level (of confidence) remains high and corporate capital spending plans for fiscal 2014/15 is solid. Companies’ positive stance is maintained,” he said.

The comments came a day after Kuroda met with Prime Minister Shinzo Abe to discuss the economy, which drew some market speculation the BOJ may come under pressure to expand stimulus as a rebound in the yen and sliding Japanese share prices cloud the outlook for the world’s third-largest economy.

via Reuters

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Japan To Cut Economic Outlook Due To Sales-Tax Hike – Nikkei

Filed under: OANDA News — Tags: , , , , , , , , — admin @ 2:52 am

Japan’s government will cut its economic assessment for the first time in almost a year and a half, reflecting concern about the blow to consumption from this month’s sales-tax increase, the Nikkei newspaper reports.

While the Cabinet Office in the report due tomorrow will retain the phrase that the economy “is recovering at a moderate pace,” it will warn about weakness in consumer sentiment, and a drop in spending after the 3 percentage point increase in the levy, according to the Nikkei.

The world’s third-biggest economy is forecast to shrink an annualized 3.4 percent this quarter, threatening to hurt Prime Minister Shinzo Abe’s bid to end a 15-year deflationary malaise. Bank of Japan Governor Haruhiko Kuroda yesterday said he told Abe the BOJ won’t hesitate to adjust policy if needed to keep inflation on track for the bank’s 2 percent target.

The Cabinet Office’s report for March said the economy was recovering at a moderate pace, noting a last-minute increase in demand intensifying before the April 1 bump in the levy. A downgrade in its assessment this month would be the first since November 2012, according to the Nikkei.

Bloomberg

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This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

The post Japan To Cut Economic Outlook Due To Sales-Tax Hike – Nikkei appeared first on MarketPulse.

Chief Cabinet Secretary Suga: Japan’s economy starting to improve on domestic demand

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Abenomics Losing Charm As Foreign Investors Pull Funds Out Of Japan

Confidence in Prime Minister Shinzo Abe’s stimulus policies is faltering after foreign investors sold $24.2 billion of Japanese shares this year, leaving them the cheapest relative to bonds in 18 months.

The earnings yield for members of the Topix index, or estimated net income divided by the average share price, rose to 7.97 percent on April 14 as the benchmark slumped 13 percent this year, data compiled by Bloomberg show. That’s a 7.37 percentage point premium over 10-year Japanese government bond yields, the most since October 2012. The equivalent spread in the U.S. was 3.75 percentage points.

Abe has yet to take new pro-growth steps even as the economy faces the sharpest quarterly contraction in three years after a sales-tax increase. Bank of Japan Governor Haruhiko Kuroda refrained from adding to stimulus on April 8, sending the Topix to its biggest weekly slide in 10 months. Japan’s sovereign debt returned 1 percent this year, bringing yields to levels some fund managers say are unattractive.

“The BOJ’s bond buying has driven yields so low that there is limited scope for further declines even if stocks retreat,” said Masaru Hamasaki, a senior strategist at Tokyo-based Sumitomo Mitsui Asset Management Co., which oversees the equivalent of $132 billion. “There are concerns that the sales-tax increase will hurt growth and corporate profits.”

Bloomberg

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Asian Stocks Higher Before Chinese GDP Numbers

Asian stocks climbed, with Japan’s Topix index heading for its biggest gain in seven weeks, after U.S. equities rallied on earnings. The currencies of Australia, New Zealand and Malaysia weakened before economic-growth data from China, the countries’ biggest trading partner.

The MSCI Asia Pacific Index climbed 0.4 percent as of 9:56 a.m. Tokyo time, led by a 1.6 percent gain in the Topix. Standard & Poor’s 500 Index futures slipped 0.1 percent after the benchmark gauge rose 0.7 percent yesterday. New Zealand’s dollar, the best-performing major currency versus the greenback in the first quarter, weakened 0.6 percent while the ringgit slipped 0.3 percent and the Aussie fell 0.3 percent. Australian bonds followed U.S. Treasuries higher amid violence in Ukraine.

China’s loss of economic momentum in the first quarter was deeper than the most widely cited data will show, according to analyst forecasts before data on growth and industrial production released today. Ukraine retook an airfield and some government buildings from pro-Russian separatists yesterday as escalating violence threatens to force NATO to do more to deter Russian moves into the region. U.S. technology shares rallied before Intel Corp. (INTC) beat earnings estimates and forecast better-than-projected second-quarter sales.

Bloomberg

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April 15, 2014

BOJ-Abe Meeting Goes Well No Easing Until Needed Says Kuroda

Bank of Japan Governor Haruhiko Kuroda met with Prime Minister Shinzo Abe on Tuesday and conveyed the central bank’s strong intention to achieve its inflation goal, which might cause it to take additional steps to boost the economy.

“There was nothing special,” Kuroda told reporters after visiting Abe at the prime minister’s office, denying Abe had asked him to ease monetary conditions further to achieve the goal of an annual 2 percent rise in consumer prices.

But Kuroda also said, “When needed, we (the bank) will adjust (our policy) without any hesitation.”

The BOJ aims to achieve the goal as part of the country’s efforts to beat nearly two decades of deflation, flooding the banking system with liquidity by purchasing government bonds and other assets from financial institutions.

The governor said the central bank is “steadily” on course but still “halfway” to attaining the goal.

Kuroda’s meeting with Abe came one year after the BOJ introduced the measure under his leadership as one of the main pillars of “Abenomics” to revive the Japanese economy.

The meeting, following ones in June and December, came as concerns linger about the possible negative impact on the economy of the April 1 sales tax hike from 5 percent to 8 percent, amid fears of slowing household spending and business investment.

Kuroda also briefed Abe on discussions at the meeting last week of finance chiefs from the Group of 20 major economies in Washington, where Kuroda, along with Finance Minister Taro Aso, explained to other countries about the BOJ’s monetary stimulus as well as the sales tax hike aimed at restoring Japan’s fiscal heath.

via Mainichi

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April 14, 2014

BoJ And Abe Government To Restart Meetings

Bank of Japan Governor Haruhiko Kuroda and Prime Minister Shinzo Abe will revive their regular meetings this month, people familiar with the matter said, in a sign the government may be concerned about recent stock market declines and an uptick in the yen.

Kuroda has remained bullish about the outlook for economic recovery and an escape from deflation, but the meeting with Abe could revive expectations of additional stimulus.

However, the sources said the government won’t be attempting to pile pressure on the BOJ for more monetary easing, one year after the central bank launched its unprecedented stimulus.

The central bank remains confident that it can meet its 2 percent inflation target by around April next year without resorting to additional monetary easing, a point Kuroda made clear at his news conference last Tuesday.

But the recent selloff in stocks and an uptick in the yen, in part caused by market disappointment over Kuroda’s denial of immediate action, has prompted the BOJ to reiterate to markets that it remains ready to act if needed.

“Of course we’re making steady progress toward meeting our 2 percent inflation target, but we’re only half way through,” he told a news conference after attending the G20 finance leaders’ gathering on Friday.

“That’s why we will continue to steadily proceed (with the current ultra-loose policy) and will adjust monetary policy without hesitation if achievement of our price target is threatened,” he said.

The BOJ’s efforts to explain its stance come as the central bank felt that markets misinterpreted Kuroda’s comments last Tuesday by focusing too narrowly on his denial of immediate action, the sources said on condition of anonymity.

via Reuters

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