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Yen Resurges After BOJ Meeting

A guest post written by DAR Wong

Currency Market Observations – 15 April 2013

Fundamental Outlook

The U.S. shows unstable recovery from below expected gain Q1 despite mild demand in housing markets have grown. Japan central bank meeting disappoints traders with no commitment in more stimuli and spikes Yen rise. The Britain avoids a triple recession after the Gross Domestic Products (GDP) rose 0.3 percent in Q1.

The U.S. existing home sales slid 0.6 percent in March to 4.92 million annual rates. Another report shows new home sales in rose 1.5 percent to a 417,000 annual pace, above median forecast. Demands for durable goods slumped in March by most in past 7 months when bookings fell 5.7 percent after a revised 4.3 percent gain the prior month.

The U.S. jobless claims fell 16,000 in the week ended April 20 to 339,000, the lowest since 9 March. On Friday, the GDP for first quarter was reported with a gain of 2.5 percent annual rate but still under forecast. Dow Jones markets took a breather from receding at almost historical high regions.

Last week, market analysts widely expected the Bank of Japan (BOJ) policymakers would prepare to boost its inflation but resulted in disappointment. The inflation slid 0.5 percent in March from a year earlier and higher than forecast. On Friday, policymakers held central bank meeting but showed no commitment in more stimulus despite they reassured to boost money supply if needed.

Yen rose against Dollar before the weekend and took down prices on general commodities. The USD/JPY did not clear above 100.00 benchmarks as widely expected. Traders look forward to U.S. FOMC and European Central Bank (ECB) in coming week for more fundamental factors to move markets.

German business confidence measured by Ifo institute in Munich said its business climate index declined to 104.4 from 106.7 in March. Some analysts expect ECB to cut its key interest rate in coming bid rate meeting on this Thursday.

The Markit Economics in London reports a composite index based in both manufacturing and services stays at 46.5 in April, shrinking below 50 levels for a fifteen month. On Thursday, GDP for first quarter rose 0.3 percent and above median forecast, thus avoided a triple-recession in British economy.

Pound recovered to higher grounds to 1.5500 regions as we predicted previously after the rise in U.K. growth. The Bank of England (BOE) say policymakers will extend cheaper loans for another year to aid small medium enterprises, aiming to enhance 9-month-old program to stimulate growth.

Technical Forecast

USD/JPY fell from 99.30 areas to 97.55 lows on Friday after BOJ meeting. We reckon the market needs another boosting opportunity in coming week to reverse the trend upwards. Technically, we foresee good buying opportunity at 96.30 – 96.80 areas in coming week for reversing up into buying interest. Abandon your long-view if the market penetrates below 96.00 levels.

EUR/USD is lacking strength though the market is still moving in technical consolidation. This week, we reckon the trend may either stay in tight range from 1.3000 -1.3200 regions or plunging into the lower band of 1.2850 – 1.3000 regions. It will take market fundamental factors to decide the direction of the trend without much clue now.

GBP/USD recovers in bullish trend after GDP improved in Q1. For past 2 weeks, we forecast the trend might climb to 1.5500 targets as it is now. This week, we reckon breaking above 1.5550 levels may continue to reach up till 1.5730 levels while the failure to clear above 1.5550 will retrace down to 1.5300 regions.

Dar Wong

This post is contributed by OPF Guest Blogger, DAR Wong.

Wong is the founder and Principal Consultant of PWForex.com and holds a professional qualification in NASD series 3 and 5 approved by National Futures Association (USA).

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DISCLAIMER: This post is written for general information only. The author, publisher and/or any third party involved in the distribution of this work assume no legal responsibilities and shall have no liability whatsoever for any direct or consequential losses, costs or expenses arising from the use of the information contained herein.

 

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