The yen is weakening against the dollar and reaching 109.82, awaiting the results of the US non-farm payrolls report today

The Bank of Japan did not leave the yen to its strength against the dollar as it works directly against what it is trying to achieve.

The yen is weakening against the dollar and reaching 109.82, awaiting the results of the US non-farm payrolls report today

Yen is weakening against the dollar

The Bank of Japan did not leave the yen to its strength against the dollar as it works directly against what it is trying to achieve. The Bank of Japan announced that it will pursue an unlimited fixed-rate bond operation as well as be increasing their 5-to-10-year bond purchases. This caused the Yen to weaken as expected as well as an increase in the Japanese Government Bonds, while the Nikkei 225 fell 1.6%.

Central Banks remain in focus today as the ECB’s Nowotny continued to give a very hawkish point of view when he iterated that the ECB should end the bond-buying program which gave a big boost for the common currency.

Over in China, the People Bank of China was once again targeted by researchers. This time it was the interest rate policy of the bank. Researchers are seeing the PBOC staying put on Interest Rates which might devalue the yuan, but in the grand scheme of things, this is exactly what they are after. A Strong yuan means fewer exports which will mean certain demise for China.

In Germany, negotiations are still taking place as the CSU (Merkel’s CDU’s counterpart), explained that “large” barriers remain in the German Government talks which makes it seem that a coalition might be further down the road.

In economic news, the Australian 4Q PPI was released at 0.6% vs the 0.2% previous. The year-on-year also increased from 1.6% to 1.7%. New Zealand also had its share of economic news with the December building permits which came in at -9.6% vs 9.6% previously.

OUTLOOK

The European market takes over the Asian Session with the Spanish Unemployment Change that is about to be released any minute now with a staggering increase of 50.3 K vs the previous -61.5 K. However, the more important news during the session would be the UK Construction PMI which is expected to remain marginally unchanged at 52.0 vs the 52.2 previous reading. Investors will monitor this index, all the while waiting for the NFP later on today in the US which will dictate the movement in the markets.

TRADERS VIEW

The yen extended a weekly loss after the Bank of Japan increased bond purchases and offered to buy an unlimited amount of benchmark debt at a fixed rate, underlining its commitment to cap borrowing costs. The Aussie weakened as funds added to short positions. Japan’s Nikkei 225 fell as much as 1.6% before paring losses.

USDJPY – The yen is trying to consolidate with resistance found at 109.77 at January 26 highs and support at 108.28 January 26 low.

USD/JPY

EURUSD – The pair is eyeing a test of the January high at 1.2537 before attempting to break through towards the 61.8% Fibonacci retracement at 1.2598.

EUR/USD

EURJPY – The Yuppy has breached the January high in a very bullish manner as resistance has now been set at September 17, 2015, high at 137.45.

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***Information contained in this newsletter are gathered from third parties and should not be regarded in any way as trade advice or recommendations by CM Trading. CM Trading does not recommend or advise traders or investors in their decision making but merely provides information from the market for its clients as additional information is made available as per the events occurring in the financial markets.

 

HIGH RISK WARNING:

Trading Foreign Exchange (Forex) and Contracts for Differences (CFD’s) is highly speculative, carries a high level of risk and may not be suitable for all investors. You may sustain a loss of some or all of your invested capital, therefore, you should not speculate with capital that you cannot afford to lose. You should be aware of all the risks associated with trading on margin.

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