USD/JPY – BOJ Kuroda Unfazed By Low Capital Spending

USD/JPY – BOJ Kuroda Unfazed By Low Capital Spending

Time Table

the rally in USD / JPY hit a snag earlier this week, as prices traded lower after reaching Top channel during the first hours of trading this morning. The bearish decline was fueled by lower than expected capital expenditure figures released in Tokyo 8:50 (1.5% Actual vs. 3.6% expected), suggesting that the Japanese economy is still relatively soft - companies do not invest for the long term, despite all the supposed confidence arising from abenomics initiatives of Prime Minister Abe. This reduced efficacy abenomics push USD / JPY lower as traders and speculators began to doubt if abenomics will be able to artificially weaken the yen further.

However, this is not a popular opinion, as we have seen trading USD / JPY slowly but steadily in 2H 2013 despite the success of abenomics questioned all this time. It seems that most traders believe in fact that the Bank of Japan Shinzo Abe will simply introduce more stimulus to achieve what they want, and who continue to maintain and USD / JPY continued to move forward.

From a technical perspective, prices may find support Bottom Channel. Stochastic readings can be directed downwards in a down cycle, but Stoch curve may likewise find support around 30-40.0 levels (where previous low was seen). Therefore, it would not be surprising if we see both Stoch and the price bounce back from here and open the way for a push towards Canal Top again.

Weekly Chart

most concern is the long-term upside potential for USD / JPY. Prices are currently trading around the ceiling of 2013 from 102.5 to 103.75 with stochastics indicator suggesting that the bullish momentum may peak soon. Since much of the current rally was driven by hopes for further BOJ stimulus in December, there is a huge downside risk lurking around should BOJ disappoints. In this regard, today's response is interesting Kuroda - BOJ Governor said he expects gradual increase in capital expenditures Japan meet the weaker than expected figures published earlier. We could be on reading, but the tone suggests that BOJ may actually be comfortable with the current pace of economic recovery (although the figures are lower than what the market expected). This would imply that a better stimulus package than expected in December may be less likely - increasing the risk of loss of USD / JPY also

Links :.
AUD / USD - 0.91 Finds solid support
EUR / USD - Installs around 1.36
GBP / USD - Almost two-year high around 1.6430

This article is only for general information purposes. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or its subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

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