Forex Trading Library

BOJ maintain the tight policy

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The USD/JPY major closed last week with a spike, reaching down to 120.30, but recovering a part towards the 120.65 area. The come-back was due to the bullish tone in the JPY, although the knee-jerk reaction was brought by the BOJ’s (Bank of Japan) latest statement regarding the lack of change in its monetary policy. The first fluctuation pushed the trend at precisely 120.34, followed after by a brief flow upwards, stopping at 120.62.

Raw data shows a 50-pips drop of the trend in the first moment after the release of BOJ minutes, which showed an 8-1 vote in favor of keeping with the tight monetary policy – dismissing expectations of a further easing, but the brief come-back afterwards sets only a 0.44% drop for the whole day of the USD/JPY major.

As per Eurostat’s (the statistical office of the European Union) latest data, preliminary analyses show that the mom (month-on-month) CPI (Consumer Price Index) printed flat in the month of October, the previous reading being of -0.1%. The report shows that alcohol and tobacco prices rise at this year’s highest rate (1.5% versus a 1.4% hike in September), followed by a 1.3% rise in services (versus 1.2% in September), a 0.4% hike in non-energy industrial goods (0.4% in September) and a decrease of 8.7% in energy prices (compared with -8.9% in September). The annualized CPI rate printed 1.0%, surpassing with 0.1% the estimated 0.9%.

Unemployment rate for September came out 10.8%, lower that the 11.0% expectations and also lower than Augusts’ 10.9%.

The USD/CAD hiked to 1.3200, as the greenback appreciated against the Canadian dollar. The upside trend has intensified after the Canadian GDP (Gross Domestic Product) release, which showed a monthly growth pace of 0.1% for the month of August, being at par with investor’s expectations. For which regards the US part, Personal Income, as well as Spending, have failed to match forecasts, only 0.1% mom in September versus 0.2% expected. The Employment Cost Index matched the consensus, rising 0.6% qoq (quarter-on-quarter) in the 3rd quarter.

Crude closed the week on gains, after two consecutive negative results, the prices lingering in the $46.00/barrel area. The main setback for the black gold continues to be the supply glut, as well as the continuous increase of oil inventories. The current tone in the greenback and the demand on the rise as per the latest US GDP releases offer a little support for the trend, allowing it to rebound from around the recent $42.00 handle.

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