Trading opportunities for currency pair: The Bank of Japan has brought in negative interest rates – minus 0.1%. The yen has weakened against the dollar by 290 points. If the stock markets aren’t swinging, we could see a growth in the pair to 123.45 after a rebound to 120.20. Further growth to cease with a close of the daily candle below 119.55.
Current situation
The Bank of Japan brought in negative interest rates on Friday – minus 0.1%. The regulator undertook such a decision in order to overcome deflation which has been going on for the past decade. The central bank will continue to purchase state bonds in order to increase the amount of money circulating in the economy. The dollar/yen jumped 290 points on news of this to 121.68.
Now to what we can expect from the Japanese yen with the introduction of negative interest rates. The dollar’s strengthening stopped at the 121.68 resistance. The price recoiled from here and on Monday I reckon we’ll see the usual movement against Friday: a fall in this case.
If the stock markets don’t start swinging, after a rebound to 120.20 I reckon we will see a growth in the pair to 123.45. Only a fall in the stock markets and the price of oil could cancel a growth scenario out after the BoJ’s monetary policy decision. Further growth to cease with a close of the daily candle below 119.55.
COT report
The new weekly CFTC (Commodity Futures Trading Commission) report was out on Friday 29/01/2016. The COT (Commitments of Traders) report shows a drop in trader’s open positions from 20/01/2016 to 26/01/2015 inclusive. Friday’s weakening of the yen didn’t make it into the COT report.
Non-Commercial: reduction of short positions by 4,314 contracts to 41,164.Increase of long positions by 8,959 contracts to 92,268.
Non-reportable Positions: short positions down 2,581 contracts to 29,091 and long positions down by 635 to 33,661.
Commercial: long positions on the yen down by 4,136 to 135,020 and short ones up 11,082 to 190,694.
Open interest is up by 4,991 to 281,013.
Forecasts which are made in the review constitute the personal view of the author. Commentaries made do not constitute trade recommendations or guidance for working on financial markets. Alpari bears no responsibility whatsoever for any possible losses (or other forms of damage), whether direct or indirect, which may occur in case of using material published in the review
Recommended Content
Editors’ Picks
EUR/USD holds above 1.0600 as focus shifts to Powell speech
EUR/USD fluctuates in a narrow range above 1.0600 on Tuesday as the better-than-expected Economic Sentiment data from Germany helps the Euro hold its ground. Fed Chairman Powell will speak on the policy outlook later in the day.
GBP/USD stays near 1.2450 after UK employment data
GBP/USD gains traction and trades near 1.2450 after falling toward 1.2400 earlier in the day. The data from the UK showed that the ILO Unemployment Rate in February rose to 4.2% from 4%, limiting Pound Sterling's upside.
Gold retreats to $2,370 as US yields push higher
Gold stages a correction on Tuesday and fluctuates in negative territory near $2,370 following Monday's upsurge. The benchmark 10-year US Treasury bond yield continues to push higher above 4.6% and makes it difficult for XAU/USD to gain traction.
XRP struggles below $0.50 resistance as SEC vs. Ripple lawsuit likely to enter final pretrial conference
XRP is struggling with resistance at $0.50 as Ripple and the US Securities and Exchange Commission (SEC) are gearing up for the final pretrial conference on Tuesday at a New York court.
Canada CPI Preview: Inflation expected to accelerate in March, snapping two-month downtrend
The Canadian Consumer Price Index is seen gathering some upside traction in March. The BoC deems risks to the inflation outlook to be balanced. The Canadian Dollar navigates five-month lows against the US Dollar.