USD/JPY: Attack on 119.52 possible in January

By GrowthAces.com

• Core consumer price index, which includes oil products but excludes volatile fresh food prices, slipped 0.4% in November from a year earlier, compared with a median market forecast for a 0.3% fall.
• An indicator released by the Bank of Japan showed that Japanese consumer prices rose 0.2% in November from a year earlier when stripping away the effect of energy and fresh food costs. That followed a 0.3% annual rise in the previous month. The BOJ began publishing its own consumer price calculations in November 2015 to better understand the underlying price trend. The BOJ’s index strips away volatile fresh food and energy costs but includes processed and imported food prices.

• We expect inflation to accelerate next year reflecting a recent rebound in oil costs and yen declines that push up import prices, easing pressure on the Bank of Japan to top up an already massive stimulus programme.
• The BOJ offered an upbeat view of the economy at its rate review last week, while the government raised its assessment of the economy for the first time in nearly two years.
• Separate data showed the jobs-to-applicants ratio rose to 1.41 from 1.40 in the previous month, matching a median market forecast and reaching the highest level since July 1991.
• But household spending fell 1.5% in November from a year earlier to decline for the ninth straight month, suggesting that slow wage growth was keeping consumers from shopping.
• Since September, the central bank has shifted its policy focus to interest rates instead of bolstering asset purchases, pledging to take necessary steps to keep the yield of the bellwether 10-year Japanese government debt at around zero percent.
• Should the BOJ successfully curb increases in government bond yields, the wider interest rate gap between Japan and the United States would devaluate the yen further against the dollar.
• The USD/JPY uptrend has stalled, but so far prices have not closed below the 10-dma and daily Tenkan that have sustained the trend the past few weeks. We are looking to use the USD/JPY corrective move to open a long position. We expect an attack on 119.52 (76.4% fibo of 2015-2016 fall) in January.

 

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By GrowthAces.com – Daily Forex Trading Strategies