Yen Plunges on Reuters Leak, Equities Grind Higher Nov. 12, 2014
US Stocks Slowly Grind Higher as Yen Tumbles On Reuters Re Release Of Japanese Govt. Leak
It apparently wasn’t good enough to release the Japanese government leak of a delay in raising the sales tax over the weekend. Since they didn’t get the weak Yen reaction Monday they saw fit to re release it yesterday to give the news trading algos a chance to have fun with it. As we can see they were not disappointed with the 200+ pip move on the EUR/JPY, 300+ on GBP/JPY and 140+ rise on USD/JPY. The USD weakness did help the pushes toward the end of the day but to be honest I dont see much sense in the Yen cross moves due to the news of the delay. It does show the Abenomics experiment is on shaky ground, however at this point I would expect some verbal intervention to come in as they start complaining of how the weak Yen hurts consumers again to try and halt the slide. On the other hand if this does continue and they lose control we could be at the beginning of the end for Japan as they push into hyper inflation mode. Potentially forcing a rise in interest rates and eventual implosion of the Japanese bond markets. Something Kyle Bass saw long ago but had the timing a little off.
EUR/USD Holds Monday Range on USD weakness.
The move on the EUR/USD yesterday does leave doubt on them really having any direction in mind for this pair. At this point its safest to trade the range while looking for the conviction to hold. They have shown two days of false conviction as price narrows into the triangle we see on the hourly chart. The best trade I see today is the short since current price is closer in proximity. Yesterdays highs at 1.2497 have confluence with the hourly 200 adding more probability for a turn there. Otherwise I will only be looking for a long at the lows around 1.2404 but if it does get there I would be happier being in short looking to take profit just above the lows.
GBP/USD Makes Second Push Up
The weakness in the USD helped the GBP/USD to make the second push up yesterday. However with it taking three days to do it I am a little skeptical. I will have a bias for the next push upward here but will remain cautious. The best level I see for the long is at the daily high of 1.5885 but if they widen the Asian range some more this morning the Lows are valid if they leave the Asian box closer to the highs. My thoughts are they will run a deeper pullback and retrace some of the inefficient move before they push again. If they cant make new highs today they will most likely hold it directionless like the Euro until they get a good reason to push with data.
EUR/JPY Gets Extended move on the Reuters Leak
With the EUR/JPY pushing over 200 pips its hard to say we have direction because they could easily pull back taking profit and retrace a sizable chunk of that before a next push upward. The move was efficient for the most part so that lowers probability for a deep retracement but the best place to see them turn today will be at 143.69. The 143.92 is valid as well but I will need to see a great set up there being a level confirmed with end of day NY price action when NY wasnt open. I will be open for the short from the highs if I cant catch a long but only expect a shorter trade for 50 pips or so. I wont hold a short for a longer run unless we do get the verbal intervention I mentioned earlier.
Forex News Today
Most of the data releases today are for the UK in the form of Unemployment and Average Earnings along with the Inflation Report later in the day. The only way they will push on the early releases is if they miss big. There is a decent chance for large misses because other UK data has disappointed as well showing weakness in their recovery. As long as they are close they will wait for what is in the Inflation Report. My thoughts are Carney will have to admit the UK economy is slowing but still hanging in there for now but any mention of deflation or inflation going lower the GBP should weaken.
The US has a few Fed member speeches but otherwise a slow data day for them. With most Fed members being quiet after the Bullard QE bomb a couple weeks ago they probably wont be saying much to stir the markets
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