JPY Strategies Remain Intact
GROWTHACES.COM Trading Positions
USD/JPY: long at 107.60, target 109.00, stop-loss 107.10
AUD/USD: short at 0.8820, target 0.8660, stop-loss 0.8870
EUR/JPY: long at 135.20, target 137.70, stop-loss 136.10
EUR/CHF: long at 1.2085, target 1.2160, stop-loss 1.2045
GBP/JPY: long at 172.00, target 175.00, stop-loss 172.30
USD/JPY: Yen weaker despite strong Japan's retail sales reading
(long at 107.60, the target is 109.00)
- Bank of Japan Governor Haruhiko Kuroda said there was no pre-set deadline for ending its massive monetary stimulus, signalling that the bank's two-year timeframe for meeting its inflation target is not a rigid one. He stuck to the central bank's view that the 2% goal would be met around the next fiscal year starting in April 2015, and added that policymakers would begin debating an exit strategy from the stimulus programme during that year.
- Kuroda reiterated that he would "not hesitate to adjust policy" should the 2% target come under threat.
- Japanese retail sales growth accelerated for the third straight month in September. Retail sales increased by 2.3% yoy, much better than the median forecast of 0.6% yoy and a rise by 1.2% yoy in August. Retail sales accelerated due to gains in apparel, food and beverage sales
- A rise in retail sale is in an encouraging sign that consumer spending could be strong enough to absorb a second sales tax increase scheduled for next year. Japanese Finance Minister Taro Aso said that he will consider compiling an economic package to support the economy after examining GDP and other economic indicators for the July-September quarter.
- The JPY is still under pressure despite good retail sales reading. The BoJ’s governor Kuroda said little new in his statement and was ignored by the USD/JPY traders. Investors are focused on the FOMC meeting now – a hawkish statement from the Fed after ending the quantitative easing is likely to push the USD/JPY higher. The nearest key resistance is at 108.38 (Monday’s high). Investors are eyeing also Japanese industrial output data (scheduled for 23:50 GMT today).
- We have gone long on the USD/JPY at 107.60 and set the target at 109.00. GrowthAces.com keeps also its long EUR/JPY and GBP/JPY positions.
Significant technical analysis' levels:
Resistance: 108.38 (high Oct 27), 108.74 (high Oct 8), 109.08 (76.4% of 110.09-105.20)
Support: 107.61 (low Oct 27), 107.39 (high Oct 20), 107.11 (low Oct 23)
GBP/USD: Looking to get long at 1.6060
(we stay sideways, but outlook is bullish)
- The GBP/USD rallied on Monday after Confederation of British Industry showed retail sales data beat expectations. The CBI said that its October retail sales balance held steady at +31, in contrast to forecasts of a fall to +25. British retailers reported the fastest sales growth in more than three years in the three months to October. The GBP/USD rose to 1.6147 yesterday but then reversed to trade in a 1.6125/1.6140 range for most of the US session.
- A fall in the GBP/USD was the result of dovish comments from the Bank of England. Deputy governor of the Bank of England Minouche Shafik is the opinion that the central bank will need to see more signs of price pressures building in Britain's economy before it raises interest rates from record low levels.
- Shafik's remarks came a day after her Monetary Policy Committee colleague Ian McCafferty said the central bank should start raising interest rates now because spare capacity in the economy was being used up so quickly.
- We stay flat on the GBP/USD ahead of FOMC meeting. In our opinion the rate is likely to fall a bit in the short term. The medium-term outlook is slightly bullish, however. Our strategy for the GBP/USD is to buy near 1.6060.
Significant technical analysis' levels:
Resistance: 1.6147 (high Oct 27), 1.6159 (30-dma), 1.6186 (high Oct 21)
Support: 1.6088 (10-dma), 1.6083 (low Oct 27), 1.6018 (low Oct 24)
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