The economic calendar is taking a breather today but will return with bang tomorrow. Market participants are looking forward to two major central meetings as the Bank of Japan and especially the European Central Bank take centre stage.
While it may be a quiet day for macroeconomic data, it hasn’t been the case for the markets. Stocks fell sharply at the London open, before paring back their losses sharply, while gold has managed to hold onto its gains after its suspicious-looking drop on Monday.
The USDJPY pair went back and forth during the course of the session on Friday, ultimately settling on a neutral candle.
The pound took a pounding in the lead up to and aftermath of the June 23 EU referendum. But in recent weeks, it has staged a remarkable recovery, even though the Bank of England has decided to cut interest rates to near zero and restarted QE.
The USDJPY pair broke higher during the course of the session on Tuesday, breaking above the top of the shooting star from the Monday session. Because of this, I believe that the market is going to continue going higher, as the Bank of Japan has worked against the value of the Yen and of course the Federal Reserve looks much more likely to potentially raise interest rates in the fairly
The Yen index continued to rise overnight as the markets absorbed news from the two day meeting of the Bank of Japan, with the general tone being one of disappointment, and the yen (FXY, quote) strengthening as a result.
The USDJPY pair took off during the session on Friday as the nonfarm payroll number came out much better than anticipated.
For equity bulls, the nightmare is over for now. For gold and silver bugs it’s just beginning. If yesterday’s price action was concerning, the overnight news from Japan has opened the trap door for both metals, which has seen them plunge in early trading, as the Bank of Japan sent shock waves through the market announcing an acceleration of its bond buying program.
The USDJPY pair broke out to the upside during the session on Monday, essentially cracking the top of a couple of hammers from last week. We are testing the 102.50 level at the moment, and thereby we think we are getting ready to head to the 103 handle.
The USDJPY pair tried to rally during the session on Thursday, but as you can see lost most of the gains by the time we closed at the end of the day. The 104 level proved to be rather resistive, so the fact that we pullback and formed a shooting star suggests that we are in fact going to see some type of pullback at this point in time.
