Check out my previous USDJPY deep dive here to see how we have progressed...
We saw price travelling in an ascending channel since the start of the year, however at the start of July we did see price failing to create the next high in the channel, and instead starting forming new lower highs and lower lows. We're now seeing price move in this new descending channel, head back to test previous highs.
109.2 is a good horizontal level to watch out for, and how price reacts around this level. A clear break below this level indicated price to continue heading lower to make the next touch of the channel. If price is failing to break through this level then we may see more touches of the channel's top, and potentially a new trend.
Looking at retail sentiment, we got quite a mixed retail sentiment, there isn't a clear sided winner as to how most traders are currently trading U/J.
Over the next week, we've got a few news events coming out, an important one being NFP, where the US will be printing their latest employment numbers, likely to show a slight increase at 870k vs 850k. The unemployment rate is projected to also dip from 5.9% to 5.7%. Keep in mind that the Fed is keeping a close eye on the labour market, waiting for more evidence of a strong jobs recovery before adjusting policy.
Wednesday's headline ISM and business activity index both blitzed expectations, while new orders, employment, and prices paid all gathered pace from the prior month to mark further if not yet the 'substantial' progress towards policy targets needed to start tapering. However, Clarida expects conditions for hikes to be met by the end of 2022, assuming inflation and jobs develop in line with his projections.
Some short-term considerations for the Dollar could cause some challenges for the mid-term downside bias. Right now, economists are expecting the US to average between 5.0% & 7.0% annualized GDP in 2021, which would be the most substantial rebound since 1984. At the same time, growth forecasts for the EU and China have been lowered, which means the relative growth differentials should be more supportive of the USD.
The additional boost in savings and additional fiscal support means the odds of upside surprises in US growth and inflation have grown. Thus, even though financial conditions, vaccine developments and relative growth and inflation bode well for some Dollar upside, the market’s main focus right now is on the Fed’s policy normalization path.
9/24/2021 The People's Bank of China banned all crypto transactions on overseas Chinese services along with its domestic ban. Bitcoin is down over 8% today and Ethereum is down 11.48%. Our outlook I think we're seeing a lot of noise around China and their condemning of cryptocurrencies before they digitize their own. In the short […]
Let's look into the Bank of England's Monetary Policy Summary which took place on Thursday the 23rd of September, 2021. Quick Summary: BoE keeps interest rates unchanged at 0.10% BoE will maintain its asset purchasing target at £875B The vote to keep policy unchanged passed with a 7-2 vote The minutes of the MPC meeting […]
9/23/2021 The precious metal snapped three days of gains and tumbled back down to the support range from $1740s-1760s approximately. Gold is down -.56% on the day going into the opening of the NY session. Our outlook Gold will likely rise on the US indices falling, and is usually due to slowing economic growth. Because […]
9/21/2021 Bitcoin Update For the past month, Bitcoin went on a tear rising over 20% from the beginning of August. Recently, however, China and other risk-off factors have contributed to a 23% decline from the recent highs around $52,760. Now the most prominent crypto has touched these monthly lows which could be a potentially good […]