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The Greenback Finally Rallies against the Japanese Yen on Aggressive Interventions by MOFFinally, as suggested in our previous updates that the Bank of Japan did ease policy by increasing the amount of its Asset Purchase Program and the MOF also took this chance as indicated in our updates to intervene the forex market to curb recent yen's strength. The Bank of Japan increased purchasing assets (including JGBs, Treasury discount bills, CPs, corp bonds, ETSs, REITS and fix-rate lending operations) by 10 trillion yen to 50 trillion yen, the amount was well above previous raise of 5 trillion yen back in March after the 9.0 earthquake and tsunami. Although the BOJ left its call rate target unchanged at 0-0.1% unanimously, all council members agreed to temper the yen's rise to avoid further damage to the country's export-led economy. |
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| Featured Technical Report | |
USD/JPY Daily OutlookDaily Pivots: (S1) 76.76; (P) 77.08; (R1) 77.38; More. USD/JPY's rebound from 76.28 accelerates further on Japan intervention and the break of 78.46 resistance indicates that a short term bottom is at least formed after USD/JPY missed 100% projection of 85.51 to 79.56 from 82.22 at 76.27. Intraday bias is back on the upside and further rise should be seen back to 79.56/82.22 resistance zone first. Though, we'd prefer to see sustained break of 82.22 (which is close to 61.8% retracement of 85.51 to 76.28 at 81.98) before confirming reversal. On the downside, below 77.84 minor support will turn bias back to the downside for 76.20. Meanwhile, break of 82.22 should pave the way to 85.51 and above. |
| Special Reports |
BOJ Extends Size Of Asset Purchase Program After Currency InterventionThe Bank of Japan extended monetary easing by increasing the size of its asset purchase program. The size of the program is risen by +10 trillion yen to 50 trillion yen. Meanwhile, policymakers also voted unanimously to leave the uncollateralized overnight call rate at 0-0.1%. The market had broadly anticipated the move as the central bank moved the meeting one day ahead and intervened in the currency market to curb yen's appreciation after SNB's action. SNB Goes For Quantitative Easing As Franc Appreciates SharplyThe SNB surprised the market by announcing it narrowed the target range for the 3-month Libor from 0.00-0.75% to 0.00- 0.25% and is aiming to lower it to 'as close to zero as possible'. Moreover, the central bank will 'very significantly increase the supply of liquidity to the Swiss franc money market over the next few days'. The unexpected move has been driven by the sharp appreciation in CHF as investors fled to safe-haven assets. ECB To Stand Aside In August But Will Continue To 'Monitor' Price Stability 'Very Closely'As economic and sentiment data released since the last meeting have weakened, the ECB will put more focus on the downside risk in economic growth in the August meeting. Therefore, we believe the central bank will keep the main refinancing rate at 1.5% and non-standard measures unchanged. In the accompanying statement, the ECB will reiterate that it will 'monitor very closely' on the upside risks to price stability but should not signal any rate hike in the next meeting. |
| Economic Indicators Update |
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| Forex Trade Ideas | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Trade Idea Update: USD/CHF – Sell at 0.7855Despite intra-day fall to fresh record low of 0.7610, the subsequent rebound suggests a temporary low has been formed there and consolidation with mild upside bias is seen for retracement to the Ichimoku cloud bottom (now at 0.7810), however, reckon upside would be limited to resistance at 0.7857 and bring retreat later. Below 0.7685-90 would suggest intra-day top is possibly formed and bring weakness to 0.7660 Trade Idea: AUD/USD – Sell at 1.0885Yesterday’s selloff signals a temporary top has been formed at 1.1081 and consolidation with downside bias is seen for retracement of recent upmove to 1.0654 (61.8% Fibonacci retracement of 1.0390-1.1081), however, reckon downside would be limited to 1.0600 and 1.0560/65 should hold, bring another rise later this month. Candlesticks Intraday Trade Ideas Update Schedule (GMT): Elliott Wave Daily Trade Ideas Update Schedule (GMT): | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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