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BOJ Rate Decision: Bank of Japan Keeps Policy on Hold After September Meeting

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The Bank of Japan (BOJ) has voted to keep its trend-setting interest rate at record lows, as policymakers continue to rely on record stimulus to keep the economy humming.

BOJ Policy Decision

In an 8-1 vote, the BOJ kept its benchmark interest rate at -0.1%, where it has stood since January 2016. The decision was widely expected by economists, who say the BOJ is unlikely to budge on monetary policy anytime soon.

The BOJ also maintained its purchase of Japanese government bonds (JGBs) so that the 10-year JGB yield remains at zero percent. Meanwhile, annual bond purchases continue to be held at ¥80 trillion.

The BOJ shifted course on monetary policy last September when it made yield-curve targeting its central concern. Since then, it has been status quo.

Economic Picture Brightens

Central bankers have been largely hands-off to let monetary policy do its job. Recent data suggest ultra-loose policies are finally having their desired effect. Japan is currently in the midst of its longest period of uninterrupted growth in more than a decade. Quarterly gross domestic product (GDP) expanded 0.6% between March and June, the fastest in more than two years.

In annualized terms, the economy expanded 4% in the second quarter, official data showed. That was much bigger than the 2.5% annualized gain forecast by economists.

Japan has now been on the right side of growth for six consecutive quarters and nine of the past 11.

Strong domestic demand and a synchronized global recovery lifting Japanese exports have been the main factors behind the growth.

Despite solid growth, inflation continues to lag the central bank target of 2%. Core inflation rose in July for the seventh straight month, but came in at just 0.5%. National CPI also expanded 0.5% annually in July for its seventh straight gain.

Inflation has been so disappointing that the BOJ recently postponed its inflation deadline for the sixth straight time. The move highlights the growing frustration with low inflation under the Abe regime.

Yen Losing Ground

Japan’s currency declined again on Thursday to trade at fresh two-month lows. The dollar-yen (USD/JPY) exchange rate reached a session high of 112.65 before paring gains. At the time of writing, the pair is up 0.2% at 112.51.

The yen has been in free-fall for the past two weeks as risk sentiment returned to the financial markets. The yen is a highly liquid reserve currency that usually receives strong bids during periods of instability. With investors pouring money into stocks, the yen has fallen by the wayside in recent weeks.

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4.6 stars on average, based on 736 rated postsSam Bourgi is Chief Editor to Hacked.com, where he leads content development for one of the world's foremost cryptocurrency resources. Over the past eight years Sam has authored more than 10,000 articles and over 40 whitepapers in the fields of labor market economics, emerging technologies, cryptocurrency and traditional finance. Sam's work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Contact: sam@hacked.com Twitter: @hsbourgi




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GBP Price Prediction: British Pound Jumps on Growing Backing for PM May’s Brexit Deal Ahead of Vote

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  • GBP catches a bid across the board as Prime Minister Theresa May gains ERG support.
  • Despite session gains, GBP/USD technically has vulnerabilities to downside risks, given rising channel formation.

GBP Bulls Awaken

The British pound (GBP) saw a decent jump to the upside on Monday, after an initially very choppy directionless start to the session. The buying swooping into GBP/USD came on the back of a growing number of ministers set to back Prime Minister Theresa May. Specifically, attention was grabbed after closely followed political watcher Robert Peston tweeted that “influential Tory Brexiter MP tells me he and his ERG Brexiter colleagues will be voting with Theresa May and the government all day tomorrow”. This is significant as the ERG is a very influential Brexit research group, which was previously plotting ways to oust PM May.

GBP/USD jumped to its highest level seen since 22nd November. The pair had seen an initial spike of 85 pips to the upside. Gains were capped however by a known strong area of supply; this can be seen tracking from 1.2870 up to 1.2930. The price has not been above here since 15th November 2018, and the bulls having faltered here on several occasions attempting to move above. Should GBP/USD manage to move above this zone, it would be a very strong signal that it is out of the bear market. Technically, this would be largely attractive for inviting further buyers to come in.

A detailed analysis of the upcoming Brexit vote can be viewed here: This Tuesday Will Be Zero Hour For the British Pound

Price Remains Confined Within Channel

GBP/USD daily chart. Price action remains within the confinements of a rising channel.

Another key technical observation is an ascending channel formation, which can be viewed via the daily chart. The GBP/USD pair has been moving within this since 12th December 2018, having gained over 400 pips since it took shape. The daily candle today briefly spiked above the upper tracking trend line of the pattern. However, the price was squeezed back within the confinements of this. Touted profit-taking kicked in towards the close of the European markets. This is not too surprising, as participants maintain an element of caution heading into the high-profile vote.

Given the nature of the above-described formation, should it play out to the textbook, vulnerabilities still point to a breakout south. This move would be heavily assisted should the British Prime Minister lose the meaningful vote on Tuesday. In terms of key levels to note, to the upside, a break above the 1.2930 supply zone will invite large buying pressure. To the downside, a breach of 1.2650, the lower support of the channel, will open flood gates to selling.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 106 rated postsKen has over 8 years exposure to the financial markets. During a large part of his career, he worked as an analyst, covering a variety of asset classes; forex, fixed income, commodities, equities and cryptocurrencies. Ken has gone on to become a regular contributor across several large news and analysis outlets.




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GBP/USD Price Prediction: GBP/USD Pump and Dump Eyed

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  • GBP/USD has been rallying heading into the crucial vote on Theresa May’s Brexit deal with the EU.
  • Markets could very well be making room for a big sell-off, depending on the outcome.

Markets Expect PM May to Fail

GBP/USD surprisingly has been making its way north, as the price on Friday made one final big push for the week. This comes despite the crucial vote on Tuesday 15th January, where UK parliament will vote on PM May’s EU deal. It appears the market is strongly anticipating the Prime Minister will lose this. As a result, the case for this is already being priced in.

Despite the fact the markets are expecting this sort of outcome, there could still very well be room for a large fall for GBP. This rally being observed may be the pump, making room ahead of it encountering a large dump. In terms of this type of behavior it has been seen time and time again ahead of big market moving events.

In these heightened times of uncertainty, both economically and politically, GBP/USD has still managed to close in the green for four weeks running. It has moved to its highest levels seen since week of 26th November. This has been the longest weekly run observed for the pair, going back as far as August 2018.

Key Technical Levels

GBP/USD 4-hour chart.

Looking via the 4-hour chart view, an ascending channel formation can be eyed, which has been in play since 11th December. Despite the freak mini touted flash crash on 2nd January that rippled the markets, GBP/USD has respected this pattern. The price has been grinding higher within this, having gained almost 400 pips.

The bull run on Friday was capped by the upper acting trend line, which is tracking at 1.2860-70. It did print its highest level since 22nd November in that latest squeeze higher. Given the further wave of uncertainty that will hit the market next week, the price will likely continue to respect this channel. Keeping in mind the recent rejection on Friday, price pressures to the downside could be eyed at the open. Support levels to note via the 4-hour; 1.2770, 1.2716 and then 1.2660.

GBP/USD weekly chart.

In terms of the weekly chart, should the bulls intend to resume the upside pressure, they will need to break down 1.2870. This is a resistance area and a break and close above can open the door for a return to the psychological 1.3000 mark. To the downside, big weekly levels to note are 1.2770 and 1.2660. Any failure of those mentioned holding, then a fast move back south to a demand zone tracking from 1.25-1.2400 is to be expected.

Featured image courtesy of Shutterstock.

 

 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 106 rated postsKen has over 8 years exposure to the financial markets. During a large part of his career, he worked as an analyst, covering a variety of asset classes; forex, fixed income, commodities, equities and cryptocurrencies. Ken has gone on to become a regular contributor across several large news and analysis outlets.




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GBP/JPY Price Prediction: Pressure on the Pound Likely to Intensify Ahead of Next Week

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  • GBP pressure to the downside could start to pick up pace, heading into the vote on Theresa May’s deal with the EU.
  • GBP/JPY has a chunky amount of room to potentially free-fall, depending on Brexit developments.

Theresa May’s Deal with EU Vote

The British pound (GBP) is heading towards a critical event next week. Members of UK parliament will be voting on Theresa May’s draft withdrawal agreement with the EU. As a reminder, this was originally set for 11th December, however the PM was forced to delay this, as she was facing defeat. Despite this having been postponed the first time round, things remain very much up in the air. There is still a strong potential that she will not gather enough support to see this deal pass.

Prime Minister May only has a week now to try corral required support for her deal. She must gather enough support in order to get it passed through parliament. In terms of the schedule of events, the vote will be preceded by four days of debating within the House of Commons. This will be commencing on Wednesday 9th January.

GBP/JPY

GBP/JPY daily chart. The price is vulnerable to further downside shocks.

Looking at GBP/JPY via the daily time frame, the candlestick for the session today – 8th January – is a bearish signal to say the least. A strong area of demand was initially seen at the range of 140.50-139.50. Most recently the price was consolidating around this region, from 21st to 31st December 2018. This was the case until the hard sellers smashed through. On 2nd January, a breach through the active support occurred, inviting chunky selling activity into play. GBP/JPY was hit once again harder on 3rd January, a continuation of the first breakout, but exacerbated by the mini ‘flash crash’, which was seen across all JPY instruments.

GBP/JPY monthly chart. Eyes on potential retest of huge monthly support area, seen at mini flash crash low print.

Keeping in mind the above, the price did initially retest the breached demand zone and was hit with a rejection. This technically signals further potential downside to come. Given how aggressive GBP/JPY can be generally, with the Brexit pressure further intensifying now, this could be extremely vulnerable. As a result, bear targets are somewhat deep. Firstly, the 136.00 figure, which is the low area of 4th January. Further to the south, eyes would then even be on a fast move back towards the flash crash low print, 130.70. This area is big in terms of monthly support, it came into action back in the months of July, August and September 2016.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 106 rated postsKen has over 8 years exposure to the financial markets. During a large part of his career, he worked as an analyst, covering a variety of asset classes; forex, fixed income, commodities, equities and cryptocurrencies. Ken has gone on to become a regular contributor across several large news and analysis outlets.




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