Tonight’s BOJ meeting could well be one of the more interesting of this week’s events…and no, that’s not a typo!
Japan’s central bank has left its primary interest rate essentially unchanged in the -0.1% to 0.00% range since late 2010, preferring to conduct monetary policy through its asset purchase program (QQE).
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Source: TradingView and FOREX.com
Some market participants believe this program of stock and bond buying could be meaningfully changed for the first time since it was enacted in 2016.
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NFP Preview: Tired King Dollar Requires Big Beat
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Source: TradingView and FOREX.com. Please note, this product is not available to US clients
The consensus expectations for Friday’s headline non-farm payrolls data point to around 190,000 jobs added in July, after June’s forecast-beating 213,000 print. The July unemployment rate is expected to have dropped back to 3.9% after it unexpectedly rose to 4.0% in June from 3.8% previously. In terms of wage growth, average hourly earnings are expected to have increased by 0.3% after last month’s slightly weaker-than-expected 0.2% increase.
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Dollar extends post NFP gains
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Source: TradingView and FOREX.com
The dollar has remained bid against most currencies post Friday’s US jobs report. The greenback rose on Friday in reaction to the mixed-bag nonfarm payrolls report which showed a weaker-than-expected headline number, but that was offset by positive revisions to the previous reports and a decent but expected rise in average hourly earnings figure.
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What a week it has been!
The biggest story this week was perhaps the easing of trade wars as China apparently blinked first in its dispute with the US. Global stock markets, led by China, and base metal prices all staged a relief rally. In Europe, Brexit remained in focus and the incoming mixed headlines tossed the pound around throughout the week.
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Source: TradingView and FOREX.com
Looking ahead to next week, we have two major central bank meetings on the agenda, namely the US Federal Reserve and Reserve Bank of New Zealand both on Wednesday, while in terms of data the economic calendar will be light. It will be also be interesting to see how the EU would respond to Theresa May’s speech.
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USD/JPY in danger of breakdown as stocks weaken again
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NFP Preview: Dollar drops ahead of US jobs report
Will the nonfarm payrolls report help to limit the downside for the buck, or will the selling accelerate in what has been a poor start to the penultimate month of the year?
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GBP/JPY arrives at critical juncture as Brexit vote looms
The GBP/JPY has staged an impressive rally off its 2019 low at 131.95 which it hit on the January 2. Ahead of the Brexit vote, it has now reached the pivotal technical area between 139.35 and 140.00. This range was the last support prior to the latest breakdown. Once support, this region could turn into resistance going forward. But if the bulls reclaim this resistance zone then rates could push further higher in the short-term, with the next potential resistance coming in at 141.60.
Meanwhile, the next support levels come in at 137.65 and 136.80 respectively. If the latter breaks, say, on the back of the Brexit vote on Tuesday, then we wouldn’t rule out a potential drop towards the next psychological level around 130.00. In any case, traders need to be extra vigilant to the prospects of price spikes, flash crashes, and indeed flash melt ups, and take appropriate measures to minimise these risks. Good traders are, above all, good risk managers.
You’re invited to a special Brexit webinar
On Tuesday, January 15 the UK Parliament will vote on Prime Minister Theresa May’s Brexit deal. Political analysts are predicting a rejection in the Commons, which could lead to several different outcomes.
Join our market analyst Fawad Razaqzada on the day of the vote to look at how the vote could unfold and what the different scenarios could mean for the markets.
- Date: Tuesday, January 15, 2019
- Time: 8:00 AM ET / 1300 GMT
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GBP/USD: UK Parliament still likely to reject May’s Brexit deal
In fact, the technical outlook of the GBP/USD is beginning to look promising. After forming a couple of doji candles in as many months, there is a hammer candle in the making on the monthly chart of the cable around the 1.26-1.27 long-term support zone (see the inset). Obviously, we are in the middle of the month, and the candle is subject to change.
On the main daily chart, meanwhile, the GBP/USD has broken above its bearish channel and moved beyond the 50-day moving average. So, the path of least resistance looks to be to the upside for the pound, as things stand. However, we can’t ignore the fundamentals and importance of tomorrow’s vote. So, at this stage, we are proceeding with extreme caution despite the apparent bullish reversal pattern on the technical charts of the cable.
You’re invited to a special Brexit webinar
On Tuesday, January 15 the UK Parliament will vote on Prime Minister Theresa May’s Brexit deal. Political analysts are predicting a rejection in the Commons, which could lead to several different outcomes.
Join our market analyst Fawad Razaqzada on the day of the vote to look at how the vote could unfold and what the different scenarios could mean for the markets.
- Date: Tuesday, January 15, 2019
- Time: 8:00 AM ET / 1300 GMT
Register Now
