Yen pairs are much more volatile at the end of the week. JPY is showing strength after the recent Fed move to raise rates to 2.50%. The yen index is up 1.45% at the time of writing this, but heavier moves are expected to come.
Demand for the currency stems from the performance of gold. As gold's price rises, so does the yen. According to Orbex, USD/JPY and gold are -94% correlated, meaning that JPY rises while USD falls during a rise in gold's price.
Gold's recent gains could also be a result of the latest GDP numbers this month. Recessions and geopolitical conflicts tend to favor the price of gold more and both of those events are happening now. Thus, a continual contraction in US output will likely give the yen a boost due to the positive correlation it has with gold and the negative correlation with USD.
The yen is historically a risk-off pair, so the uptrend is likely to continue. However, it's harder to tell which risk-off currency is better to choose from. So, it will probably look stronger to investors when stacked against minor currencies or risk-on ones.
Up against the USD, however, JPY does not look promising. We're looking at GBPJPY, EURJPY and CADJPY on the short side while CHFJPY and USDJPY are more questionable.
This pair looks bearish as a potential momentum shift may have occurred on the 1D timeframe. Price is making lower highs and had a fake breakout from a wedge pattern. The pair may test the bottom of the rising trend line in the wedge. If that happens, we should watch for a break underneath and a fall to the 160.500s.
EURJPY has already broke underneath a rising trend line on the 1D timeframe. It also established a lower low which suggests that price wants to continue lower. If the pair closes below that trend line and 136.900s we might see another leg down to the 132.800s.
Similarly to the USD, CAD is looking mostly stronger than the yen. However, price did cross under a falling trend line and is continuing to fall lower. Price maty fall to the 101.900s level before finding support. A double top lies around 107.
On Friday this past week, the United Kingdom’s Office for National Statistics released the latest reports on the UK’s Gross Domestic Product (GDP), a means of measuring economic output. It was revealed that their economy grew by -0.6% month-over-month, and -0.1% quarter-over-quarter, which entails a contraction for both timeframes. Although these numbers are less disastrous […]
This week the public received startling news: on Wednesday morning, month-over-month CPI (a proxy for inflation) in the United States had unexpectedly remained static, clocking in at 0% whereas a moderate 0.2% increase had been forecast. Core CPI (which excludes food and energy prices) likewise came in lower than anticipated at 0.3% month-over-month, while Thursday […]
Next Tuesday, the RBNZ will announce their new official bank rate which is expected to be 3%, a 0.50% rise from July. This hike will make it the highest yielding major currency on the market. Here is why you should consider buying the kiwi before Tuesday's decision as well as some strong NZD long setups. […]
