BoJ Game Plan Recap

August 1, 2016

Leading into Friday’s Bank of Japan monetary policy decision, we questioned whether anything they could do wouldn’t disappoint markets. In short, the answer was always going to be, and subsequently was, no.

Kuroda and the BoJ’s decision to basically do the bare minimum in terms of stimulus, and nothing when it comes to already negative interest rates, just wasn’t enough for an expectant currency market at a key technical junction.

USD/JPY Daily:
Click on chart to see a larger view.

The thin, nervous market was a preview of things to come as disappointment flooded the market and USD/JPY traded sharply lower cleanly off daily resistance.

The BoJ increased their ETF buying from ‎¥3.3 trillion to just ‎¥6 trillion, but when weeks leading into the decision were surrounded by talk of literally dropping money into the bank accounts of households (helicopter money), a ‎¥3 trillion Yen increase to markets, means they may as well have just sat on their hands.

USD/JPY 15 Minute:
Click on chart to see a larger view.

As you can see on the intra-day chart, the market sold off hard from resistance, recovered somewhat throughout the London session, but was subsequently sold off once again following the weaker than expected US GDP data during the US session.

“USD Advance GDP q/q: 1.2% v 2.6% expected”

USDX Daily:
Click on chart to see a larger view.

Once again, technical selling which was looking for any fundamental excuse to pull the rug out from under the market is exactly what we got.

Follow the @VantageFX Twitter account into this week as we continue to analyse the markets and identify trading opportunities in real time!


On the Calendar Monday:
CNY Manufacturing PMI
CNY Non-Manufacturing PMI
USD FOMC Member Dudley Speaks

CHF Bank Holiday
GBP Manufacturing PMI

CAD Bank Holiday
USD ISM Manufacturing PMI

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Dane Williams – @VantageFX

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