something interesting

<  BACK TO Market Analysis

PIG TODAY-Traders brace for dollar at ¥100 if Bank of Japan disappoints

 

 

Investors are trapped in an unbearable waiting game ahead of the Bank of Japan and Federal Reserve meetings, with currency traders in particular eyeing the Wednesday announcements with caution.

And for good reason—analysts are predicting a major shake-up in foreign exchange trade if the two central bank mastodons surprise the markets, which could send the yen USDJPY, +0.00% soaring again despite the Bank of Japan’s wishes.

The Japanese currency has already strengthened from ¥103.35 against the dollar a few days ago to ¥101.75 on Tuesday, but could rally to as high as ¥100 against the dollar if the BOJ fails to impress investors, analysts said.

“The chances of a USDJPY falling to 100 is very likely if the Bank of Japan fails to take meaningful action,” said Ana Thaker, market economist at PhillipCapital UK, in emailed comments.

The dollar hasn’t traded at ¥100 since mid-August.

“In order to significantly weaken the yen in the long term, the Bank of Japan would have to implement both a rate cut and substantial monetary easing,” Thaker said.

“Equally, if the Fed holds off on raising rates, we could see considerable dollar weakness and see markets enter long yen trades regardless of how the BOJ acts before the Fed. As much as the BOJ attempt to weaken the yen, as global uncertainty persists and a risk-off attitude prevails, the yen will strengthen,” she added.

Japanese policy makers have fought hard in recent years to battle low inflation, slow growth and a strong yen, lowering rates into negative and launching an aggressive asset-purchase program. However, there is an increasing sense the measures are losing their effect and not producing the expected results.

“There’s no doubt, that after two consecutive disappointments, the bar has never been set higher”Kay Van-Petersen, Saxo Capital Markets

The BOJ members are now sharply divided over the best way to proceed as the yen refuses to weaken significantly and the country’s banking sector is starting to feel the pinch of low rates and a flat yield curve.

There’s mounting speculation the central bank will undertake an “inverse twist” operation and take steps to steepen the yield curve by lowering purchases of long-dated Japanese government bonds by the central bank. That would help offset some of the adverse side effects from negative interest rates, as it would allow banks to borrow cheaply and lend at a higher rate.

“There’s no doubt, that after two consecutive [policy] disappointments, the bar has never been set higher,” said Kay Van-Petersen, macro strategist at Saxo Capital Markets in Singapore, in a blog post.

“But the BOJ is very divided in terms of the outcome. We could see a complete pass where all they are doing is assessing and discussing how effective or ineffective their measures have been so far,” he said.

If the central bank disappoints, the dollar could quickly drop to its pre-Jackson Hole level of around ¥100.50 and continue its slump to ¥100, Van-Petersen said, referring to the Fed’s Wyoming retreat in late August.

“It’s worth bearing in mind that the BOJ meets before the Fed, so the full impact on the yen strengthening could come after the Fed meeting,” he noted.

The Bank of Japan will announce its policy decision before the U.S. open on Wednesday, while the Fed’s rate decision is due at 2 p.m. Eastern Time. Fed Chairwoman Janet Yellen is scheduled to hold a news conference at 2:30 p.m.

 

Source: marketwatch.com

 

 

Investors are trapped in an unbearable waiting game ahead of the Bank of Japan and Federal Reserve meetings, with currency traders in particular eyeing the Wednesday announcements with caution.

And for good reason—analysts are predicting a major shake-up in foreign exchange trade if the two central bank mastodons surprise the markets, which could send the yen USDJPY, +0.00% soaring again despite the Bank of Japan’s wishes.

The Japanese currency has already strengthened from ¥103.35 against the dollar a few days ago to ¥101.75 on Tuesday, but could rally to as high as ¥100 against the dollar if the BOJ fails to impress investors, analysts said.

“The chances of a USDJPY falling to 100 is very likely if the Bank of Japan fails to take meaningful action,” said Ana Thaker, market economist at PhillipCapital UK, in emailed comments.

The dollar hasn’t traded at ¥100 since mid-August.

“In order to significantly weaken the yen in the long term, the Bank of Japan would have to implement both a rate cut and substantial monetary easing,” Thaker said.

“Equally, if the Fed holds off on raising rates, we could see considerable dollar weakness and see markets enter long yen trades regardless of how the BOJ acts before the Fed. As much as the BOJ attempt to weaken the yen, as global uncertainty persists and a risk-off attitude prevails, the yen will strengthen,” she added.

Japanese policy makers have fought hard in recent years to battle low inflation, slow growth and a strong yen, lowering rates into negative and launching an aggressive asset-purchase program. However, there is an increasing sense the measures are losing their effect and not producing the expected results.

“There’s no doubt, that after two consecutive disappointments, the bar has never been set higher”Kay Van-Petersen, Saxo Capital Markets

The BOJ members are now sharply divided over the best way to proceed as the yen refuses to weaken significantly and the country’s banking sector is starting to feel the pinch of low rates and a flat yield curve.

There’s mounting speculation the central bank will undertake an “inverse twist” operation and take steps to steepen the yield curve by lowering purchases of long-dated Japanese government bonds by the central bank. That would help offset some of the adverse side effects from negative interest rates, as it would allow banks to borrow cheaply and lend at a higher rate.

“There’s no doubt, that after two consecutive [policy] disappointments, the bar has never been set higher,” said Kay Van-Petersen, macro strategist at Saxo Capital Markets in Singapore, in a blog post.

“But the BOJ is very divided in terms of the outcome. We could see a complete pass where all they are doing is assessing and discussing how effective or ineffective their measures have been so far,” he said.

If the central bank disappoints, the dollar could quickly drop to its pre-Jackson Hole level of around ¥100.50 and continue its slump to ¥100, Van-Petersen said, referring to the Fed’s Wyoming retreat in late August.

“It’s worth bearing in mind that the BOJ meets before the Fed, so the full impact on the yen strengthening could come after the Fed meeting,” he noted.

The Bank of Japan will announce its policy decision before the U.S. open on Wednesday, while the Fed’s rate decision is due at 2 p.m. Eastern Time. Fed Chairwoman Janet Yellen is scheduled to hold a news conference at 2:30 p.m.

 

Source: marketwatch.com

lastest Articles

Market Analysis
Forex Week Ahead – No ease up for Powell
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
BOE Quick Analysis: Bailey blasts sterling with specter of negative rates, why more falls are likely
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
ECB’s De Guindos: Euro exchange rate is fundamental for inflation
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Today: Fed drives dollar higher, gold and stocks lower, BOE, jobless claims eyed
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Gold aims $1980 as focus shifts to Wednesday’s FOMC
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
GBP/USD to surge to 1.40 by September-2021 – UBS
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Today: Upbeat Chinese data boosts mood, Boris' bill passes first hurdle, Gold shines
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Week Ahead – More stimulus on the way?
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
ECB's Lane: Euro's rise dampens inflation outlook
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Today: King dollar holds the rein amid cautious optimism, eyes on US CPI
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
EUR/USD Forecast: Euro set to fall? ECB expectations may be overconfident
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Today: Brexit in deep crisis, vaccine hopes resurface, all eyes on the ECB
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Brent Oil resumes its core bear trend
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
ECB’s Muller: A timely exit from temporary emergency measures is important
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Today: Vaccine trial halt exacerbates risk off mood, Brexit, BOC, and US fiscal talks eyed
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Gold Price Analysis: XAU/USD drops further and approaches $1,900/oz
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Bitcoin Price Update: BTC bulls ready to strike back once $11,000 is cleared
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Today: Hard-Brexit fears pound the Pound, Dollar bid on US-Sino woes
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
EUR/USD risks deeper pullback as 1.20 peak looks far
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Gold Price Analysis: Downside appears more compelling while below $1946 – Confluence Detector
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Today: Dollar stabilizes in the NFP aftermath, Oil tumbles amid holiday-thinned trading
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Week Ahead - Trump Closing the Gap
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Nonfarm Payrolls Preview: Fed’s policy shift to introduce vital noise
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Gold rebounds from weekly lows, turns neutral around $1945 region
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
EUR/USD trims losses and regains 1.1850 post-US ISM
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Fed's Williams: Policymakers seek inflation that targets 2% over time
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Bitcoin Cash Market Update: BCH fork is inevitable as Bitcoin ABC team separates from the project
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Today: Dollar climbs back from the abyss, ADP NFP, Fed speakers awaited
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Week Ahead – Bring on the Jobs Report
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Week Ahead – Jackson Hole Goes Virtual
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Week Ahead - The focus remains on COVID-19, the Fed and Congress
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Today: Gold up, dollar down amid stalled fiscal talks, vaccine hopes, ahead of jobless claims
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Week Ahead- Is the economic recovery stalling?
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Today: Dollar licking its wounds, gold gives ground, ahead of the all-important Fed decision
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Week Ahead – What more can the Fed do?
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Bitcoin Market Update: BTC/USD hits a pause button before another bullish assault
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
EUR/USD Price Analysis: Potential correction ahead of further gains
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Today: China's payback weighs on markets, boosts dollar, PMIs, coronavirus figures eyed
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
GBP/USD: Technicals show bulls have the upper hand
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Gold: Correction in sight after reaching nine-year highs
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Today: Dollar licking its wounds, gold shines, US coronavirus cases eyed after Trump's U-turn
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Gold jumps to fresh multi-year tops, beyond $1820 level
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Today: EUR/USD sells the fact, Gold looking strong, Trump's coronavirus briefs make comeback
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Bitcoin Market Update: BTC fails to live up to the status of digital gold
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
S&P 500 Futures Price Analysis: Bears retain control after rejection at falling trendline resistance
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Today: EU leaders can’t reach an agreement on the EU rescue fund
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Week Ahead – Focus remains on Virus Spread, Fiscal Stimulus, Rebounding data, and Earnings
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
EUR/USD continues to look at the 1.1495 March high
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
AUD/USD to remain resilient in the near-term
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Today: Dollar dominates ahead of EU Summit, updated look at the US consumer amid rising cases
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Gold probes multi-day lows around $1,790/oz
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
EUR/USD Price Analysis: A test of 1.1420 appears closer
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Today: US dollar seizes control as risk aversion returns, a busy docket ahead
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Gold to stay above $1800 fueled by lower real rates
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
ECB expected to keep rates unchanged
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Today: Vaccine, earnings optimism downs the dollar; eyes on COVID-19 stats, BOE’s Bailey
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Week Ahead – Bring on Earnings Season
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Crude Oil Futures: Upside looks limited
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
ECB’s Lagarde: Economic recovery would be constrained, uncertain and fragmented
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Today: Gold eyeing $1,800, dollar mixed, as coronavirus, Hong Kong peg move markets
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Gold Price Analysis: Holds steady above $1775 level, bullish bias remains
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
BOJ to project economic recovery in report next week – Reuters
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Today: Chinese optimism downs dollar as investors ignore US coronavirus, data eyed
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Week Ahead – Economic Reopening Continues
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Today: Stocks' strength, dollar downing face Non-Farm Payrolls test as Trump endorses masks
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
BoE's Haskel: Activity appears to be coming back faster than anticipated
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Company News
GBP Bank Account
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Today: Gold shines, markets look for direction after a successful Q2, ahead of busy start to Q3
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Gold eases below $1770 level, downside seems limited
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
EUR/USD: Europe fights coronavirus and stuns the dollar
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Today: Markets attempt to shrug off grim coronavirus developments
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Week Ahead – Jitters Continue into Busy Week
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
US Dollar Index clings to gains near 97.50 ahead of data
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
ECB’s Lagarde: Economic recovery will be a complicated matter
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Gold sticks to the positive outlook
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
EUR/USD Price Analysis: Focus now shifted to 1.1170
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Today: Dollar dominates, gold shines as coronavirus rages in the US, triple data release eyed
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
EUR/USD Price Analysis: Rising bets for a test of 1.1400 and beyond
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
EUR/USD recedes from tops above 1.1300
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Gold: Falling US Real Yields fuels bull trend towards new highs at $1921 – Credit Suisse
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Today: Risk rides the Navarro rollercoaster, Eurozone/ UK PMIs, virus stats in focus
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
BoE is seen increasing further the size of QE – UOB
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Today: Risk-recovery back in play, US dollar recedes with second-wave virus fears
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Week Ahead – Markets play tug-of-war with Covid-19 concerns and reopening momentum
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Today: Coronavirus, weak data outweigh reopening optimism, BOE, jobless claims eyed
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
ECB's de Guindos: Better if EU aid is distributed via grants rather than loans
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Gold Price Analysis: XAU/USD slumps toward $1,710 on improving risk sentiment
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Today: Dollar up as health, geopolitics replace consumer optimism, Powell, COVID-19 data eyed
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Gold clings to modest daily gains, around $1730 area
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Today: Double stimulus talk downs dollar ahead of Powell's power-play, US retail sales
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Today: Coronavirus concerns trigger dollar domination, commodity currencies climb down
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Week Ahead – Market Recovery Under Threat?
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Today: Houston, we have a problem, US coronavirus, Fed gloom, crash markets, consumers eyed
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Obsessed
Killing Hope ( Before it Kills You )
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Euro Fails at Resistance as Federal Reserve Expands Lending Program
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Today: Can the dollar lick its wounds? Fed speculation, geopolitics, and data eyed
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
GBP/USD: Brexit, coronavirus and protests to pressure the pound
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Gold: The beginning of the end, $1600 by Q3
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Today: Dollar looking for a new direction after the excellent Non-Farm Payrolls, Lagarde eyed
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Week Ahead – The Recovery Continues
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613