The Bank of Japan and Abenomics is currently up to its usual playbook as it looks to stimulate the market further and drive down the Yen even further against the USD. In this case the look and feel of what is to come is stimulus packages to Japanese corporations who are being provided low interest loans for off-shore investments in an effort to push yen selling across the corporate levels. At present there has been 200 billion in Yen allocated for this stimulus package which is rumoured to be around 30 trillion Yen. By all measures this is a very large package and net fiscal stimulus spending will be 6 trillion yen which is double the 3 trillion yen that was expected. As a result we have seen large movements in the USDJPY previously, but so far this one is only just starting to trickle in across the board as people wait to see the Bank of Japans full package and what it will indeed look like in the long run.
The USDJPY as a result has crept up the charts but has pulled back slightly in trading and as markets are starting to price in the possibility of bullish USD talk this week with the FED. The recent double top at 107.491 has also put pressure on traders looking for bullish movements higher. For now it seems that traders will be looking to play technical’s down to possible support levels before looking for a chance to push back higher, with support at 104.817 and 103.885 being strong levels that many will look to bounce of when it comes to bullish movements.
The Kiwi dollar is set for some fast paced movements as trade data is due out shortly, and the current consensus amongst traders and economists is that we will see a August rate cut from the Reserve Bank of New Zealand. If we see a strong result this could see the RBNZ look to take pause given that the economy may be stronger than first realised, but at this stage it has been creeping down for some time and while we could see a short term bump in the NZDUSD it certainly wouldn’t hold back the firing power of the RBNZ which is looking to execute a rate cut after imposing restrictions across the property market.
The NZDUSD on the chart has so far stopped short of moving any lower and bounced of support at 0.6916 while also flirting with the 70 cent psychological level above the current candle on the daily chart. This ranging behaviour is a pattern of traders waiting on data before continuing any bullish movements on concern that the trade balance data could be a curve ball. Any bounce upwards will find pressure at the 0.7046 level and further levels lower at 0.6888 and 0.6760 seem much more likely in the long if traders have their way with the NZDUSD.