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Inflation Rise Puts Fresh Focus on BOJ
JPY is seeing better demand today on the back of the latest CPI figures released overnight. National Core CPI was seen rising to 3.4% last month, above the prior and expected 3.1% reading the market was looking for. The data has put fresh focus on a possible shift in BOJ monetary policy in the near-future. While the BOJ was seen keeping rates unchanged at its last meeting, new BOJ head Ueda ordered a review of monetary policy which many saw as paving the way for a shift in stance from the bank. With CPI seen still rising last month, traders have moved capital back into JPY reflecting an uptick in hawkish expectations.
JPY had been weaker over the week as a result of improved risk sentiment linked to US debt ceiling optimism. Should a deal be confirmed, USD is likely to make a fresh push higher, weighing on JPY near-term. Hawkish Fed expectations are also likely to keep USD underpinned near-term. However, traders should be wary of any BOJ comments in the run up to the prior meeting with the potential for huge JPY volatility should the BOJ signal a shift in monetary policy.
Technical Views
USDJPY
The rally in USDJPY this week has seen the market breaking above the 138.03 level. With momentum studies turned bullish, the focus is on a continuation higher while above this level with the bull channel highs the first objective ahead of higher resistance at the 145 level. To the downside, 132.91 is the main support to note, with the channel lows coming in around there also.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.