JPY news - page 18

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Japan Manufacturing PMI (flash, September) : 50.3 (prior 49.5)


Preliminary Nikkei / Markit Japan manufacturing PMI for September

Comes in at 50.3, for the first 'expansion' reading in 7 months
  • prior 49.5
-
This is a positive sign for Japanese manufacturing ... admittedly s tentative sing of potential economic growth. New export orders rose to a preliminary 50.2 from a final 47.2 in August (1st time in expansion for this in 8 months)
 

USD/JPY forecast for the week of September 26, 2016


The USD/JPY pair fell during the course of the week, slamming into the 100 handle. This is an area that I believe is a bit of a barrier that the Bank of Japan will probably trying to defend one way or another. With this being the case, I’m looking for some type of supportive candle in order to start going long again. It might be easier to trade this market off of the shorter-term charts, as I think that we will have quite a bit of choppiness going forward.



 

Japan leading index CI July final 26 Sept

  • coincident index 112.1 vs 112.8

Not price changers .One for general filing.

The Leading Indicators Index is a composite index based on 12 economic indicators, that is designed to predict the future direction of the economy.

 

USD/JPY Moving Lower Following Failure at Resistance


USD/JPY tested resistance at the 101.20 level, defined by the September 7th minor corrective bottom, in last Friday’s trading and this test has failed, as a fresh wave of selling is currently driving the pair lower. At present, USD/JPY is trading at 100.40, down 0.65% from Friday’s closing level.

According to a report from Reuters, the yen is strong following “another volley of promises from the Bank of Japan to do everything necessary to get inflation back on the rise, including cutting interest rates further into negative territory.”

Initial support for today’s session is at last week’s 100.10 low. A drop below this level would bring key support into play at the 99.54/99.03 zone. Given the technical significance of this area, another rebound attempt from this support cannot be ruled out, particularly given the current oversold condition. However, given the numerous failed rally attempts in recent weeks, the overall bias is to the downside with an eventual drop below key support expected. On such a move, the target becomes the 96.50 level, as shown on the weekly chart.

Should a rebound take place, reinforced resistance is at the 101.20/101.25 level, followed by the falling trendline on the daily chart, which currently stands at the 102.50 level. This trendline is expected to remain firmly intact and any near term advance, which brings this level into play, appears best used as a selling opportunity.

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Bank of Japan Minutes for the July meeting

  • Members shared the view that inflation expectations had weakened recently
  • Members shared recognition that risks to Japan's economic activity and prices remained skewed to downside
  • Some members said Japan's inflation expectations were vulnerable to external shocks like oil price falls, slowdown in overseas economies
  • Many members said the Bank of Japan should expand ETF buying given the risk overseas economies uncertainties might affect business, consumer sentiment

Headlines via Reuters


 

No Further BoJ Cuts Unless USD/JPY Falls Below 95

In Japan, Governor Kuroda indicated he expected the pace of JGB purchases and the shape of the yield curve to remain broadly stable. Further easing, if needed, would be accomplished via further cuts to the deposit rate.

Our economics team does not expect further rate cuts unless USDJPY were to fall below 95. Given this, the USD continues to depend on Fed tightening to regain momentum, a dynamic unlikely to resurface until late in Q4.

Japanese Prime Minister Abe, speaking from parliament Tuesday, said there is no need to rethink the Government Pension Investment Fund (GPIF) portfolio. Some market participants had previously expected the GPIF to reverse their shift into foreign assets from October 2014, while some have also argued they are likely to shift to an even higher weighting of foreign assets in sympathy with the aims of a weaker JPY.

 Our view is that the key point regards the GPIF is how much of their FX exposure they are now aiming to hedge. In April this year, the newly appointed President, Norihiro Takahasi, said that they are now using some currency hedging in EUR and USD. The size of these flows is very large – for every 1% of their stock of foreign currency risk, they need to buy approximately USD 4.5-5bn worth of JPY.

source

 

Bank of Japan to cut rates, Barclays says

From Barclays:

The Bank of Japan (BoJ) did not ease further at its September meeting but adopted a new policy framework, "Quantitative and Qualitative Monetary Easing with Yield Curve Control" (QQEYCC), which consists of 1) yield curve control and 2) inflation-overshooting commitment based on its comprehensive assessment. Regarding yield curve control, BoJ aims to maintain the yield curve around the current level (eg, 10y JGB around 0%) by controlling both short- and long-term interest rates. Under the inflation-overshooting commitment, the BoJ intends to continue expanding the monetary base until core CPI stably exceeds 2% y/y instead of the previous time-based horizon of two years.

For additional easing options, the BoJ explicitly mentioned 1) cuts to short-term interest rates; 2) cuts to the target level of long-term interest rates; 3) expansion of asset purchases (qualitative expansion); and 4) accelerated monetary base expansion, but only "if situation warrants."

Our Japan economics team now expects a rate cut (from- 0.10% to -0.30%) at the next MPM on 31 October-1 November.

While the case for medium-term JPY appreciation remains intact and a shallower Fed hike path may put downward pressures on USDJPY, BoJ's deeper negative rates expectation could potentially slow down the appreciation path.

 

After capping first time around USDJPY has now taken out the 101.50 offers


Currently still on the front foot we wait to see whether European desks have anything of note to say on the OPEC deal.

My gut feeling is that the rally will run out of steam once the reality sets in over what is left for OPEC to do to actually get these (minimal) cuts allocated and in place.

There is however a feel-good factor prevailing for the moment given that they have at least agreed to agree at some point down the road.

Nikkei having another spurt higher as I type as we head into the final part of the day's official session with USDJPY remaining above 101.50

 

USD/JPY Weekly Forecast October 3-7


After hovering slightly above the psychological 100.00 level in the early week, USD/JPY pushed higher in a recovery attempt. While there was some momentum in the rally, resistance seen on a daily chart served to keep gains contained. Significant resistance in the pair is seen in the form of a declining channel from late January highs, the currency pair has been trading near the upper bound of the channel throughout September but has failed to break higher.

The BoJ meeting earlier this month carried the potential to provide the catalyst required for a bullish technical break as the central bank introduced further easing measures. Gains in the pair after the announcement were not sustained, and USD/JPY bulls have turned to the Fed to provide the fundamental backdrop required for a bullish technical break. Data in the past week indicated an improvement in inflation data, and labor data scheduled for release in the upcoming week stands to further impact market expectations of a near-term rate hike in the United States.

Inflation data has shown improvement in September with CPI data released earlier in the month exceeding expectations, and PCE price index figures coming in positive in the past week. The annual core PCE price index was reported to rise 1.7%, against a prior reading of 1.6%. The US Dollar failed to rally following the data release as news flows relating to Deutsche Bank dominated risk trends. In the upcoming week, NFP figures are scheduled for release on Friday and will provide further guidance on the Feds progress towards their dual mandate. The jobs report is expected to come in at 171,000 following a prior reading of 151,000.

Risk trends stand to impact the currency pair as headlines from further developments between Deutsche Bank and the US authorities stand to impact safe haven assets. On Friday, there was news that a fine would be settled at $5.4bn, causing a return of risk appetite across financial markets.

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BOJ Q3 Tankan: Large Manufacturing Index: 6 (expected 7)


The Bank of Japan's Tankan Survey for Q3. A survey of manufacturing and service companies designed to assess business conditions in Japan. The BOJ Tankan is conducted quarterly. 

  • Tankan Large Manufacturing Index, 6 (expected 7, prior 6 )
  • Tankan Large Manufacturing Outlook, 6  (expected 8, prior was 6)
  • Tankan Large Non-Manufacturing Index, 18  (expected is 18, prior was 19)
  • Tankan Large Non-Manufacturing Outlook, 16 (expected is 18, prior was 17)
  • Tankan Large All Industry Capex: 6.3% (expected is +6.5%, prior was 6.2%)
  • Tankan Small Mfg Index: -3 (expected -5, prior was -5)
  • Tankan Small Mfg Outlook: -5 (expected -6, prior was -7)
  • Tankan Small Non-Mfg Index: 1 (expected 0, prior was 0)
  • Tankan Small Non-Mfg Outlook: -2 (expected -2, prior was -4)
With 8 results in my summary alone its hardly surprising that it's a mixed bag. Not uniformly bad, but not great either. Large firms in a much better place than smaller firms, but that's been a pattern for a long time now.
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