JPY Crushed On Kuroda Comments June 11, 2015
BOJ Kuroda Sends Yen In Tailspin With “Desire For FX Stability ” Comment
With markets so dependent on central bank activity its no surprise that the Yen would take such a hit on seemingly mild comments from the BOJ head. However considering historically the BOJ has been the most verbal interventionist for the last 20+ years having lost any room with rates over two decades ago. Of course they will say they dont mean to move markets but to think they dont know there will be a reaction seems naive at best if not totally stupid. My guess is that they are looking for some reaction but always act surprised at the move they cause just to save face. I admit I had a chuckle reading an article titled How Do You Spell Irony In Japanese this morning. Im sure most readers will too.
Bank of Japan Governor Kuroda has managed to do it again. In his now daily missives on “deflation mindset being over”, “economy is on the right track”, “QQE is working”, and his best yet “BoJ has no plan to finance government debt”, Kuroda unleashed the ultimate idiocy last night when he proclaimed “it is desirable for FX to move in a stable manner.” USDJPY has fallen over 2 handles for the biggest surge in JPY strength in 6 months… to which Amari noted “Kuroda didn’t intend to move market with his remarks.” Irony indeed.
EUR/USD Cant Push With USD Weakness
Although the EUR/USD did close slightly higher yesterday, most of the USD weakness caused by the USD/JPY drop was soaked up in the GU as a weak Euro ran the EUR/GBP down. As it stands the EU has ran stops to the highs yet again and showed us some topping yesterday suggesting the next push will be down but remaining in a two day chop only testing the next level in the stop run leaves it more open on direction. The best level to short is up at 1.1363 but I will be open for a clear entry at the NY/London overlap highs around 1.1338 close to Tuesdays highs as well. The only level I will consider a long is down at 1.1274 but prefer to be short waiting for a break if it tests there.
GBP/USD Runs Extended Third Push
The 40+ pip blow out of the ADR on the GBP/USD yesterday does suggest they have conviction for more pushes to the upside but its a better plan to be more open on direction just in case they want to run some stops lower first. If they do push higher the best level to do so is at 1.5486 or just below if they want some stops first. Showing good conviction below 1.5478 will signal a deeper pullback to at least test 1.5439. I will be open for the short from 1.5540 or after any conviction below 1.5478.
EUR/JPY Slammed By Kuroda
With the Yen getting pummeled across the board yesterday the EUR/JPY took quite a hit. The clearer way to look at this is having two pushes but the extent of the moves is cause for concern of a pullback. The rejection at 139.43 and 139.11 does suggest they have already retraced as much as they need but there will have to be more conviction of Yen strength in order to break the lows. The best level to short today is around 139.11 but a higher test wont surprise me. Otherwise the Asian highs are valid if they cant test higher this morning. I will consider a long from 138.59 but will need enough price action to change my bias.
Forex News Today
The calendar is quiet until the NY session today when we have Retail Sales Data and Thursday Unemployment Claims. Retail Sales is expected to rise significantly so a miss to the upside should have more potential for a sustained USD strength move while a disappointment any where close to the previous data around the zero mark would have a better chance for USD weakness. Unemployment Claims will need a large miss to potentially offset on opposite (positive/negative) data but if both releases miss in the same direction it should add fuel to any USD move.
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