Can the BoJ Provide Anything but Disappointment for USD/JPY?

July 29, 2016

Strap yourselves in because your USD/JPY stops aren’t going to help you make money today!

USD/JPY 1 Minute:
Click on chart to see a larger view.

Oh you know, just a lazy 200 pip M1 move during Asia!

With whipsaws such as this coming during thin, Asian session trade, there is every chance that your day trading stop loss will be knocked out as the market whipsaws. Headlines and rumours around any looming additions to the bank’s stimulus package are sure to keep coming, all the way into the Bank of Japan’s Monetary Policy Statement.

But in saying that, the technical nature of markets even during times of panic never ceases to amaze me:

USD/JPY 4 Hour:
USD/JPY Bank of Japan whipsaw
Click on chart to see a larger view.

Which one of you day-traders pulled the trigger here? Give us a mention on the @VantageFX Twitter for a shout out!

Anyway let’s get back on track and take a step back to look at the bigger picture. The daily chart shows that we still have USD/JPY in a huge bearish channel. Each bearish rumour of less than expected stimulus just happens to keep coming out at channel resistance, again highlighting just how technical this over expectant and jumpy market has still been trading:

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

32/42 analysts surveyed by Bloomberg in July predict that the BoJ will announce further easing. This has meant that the market has been highly expectant, rallying from the previous swing lows on that daily chart on nothing but expectation. And where there’s expectation, there disappointment if it goes unmet.

With Prime Minister Shinzo Abe approving a ¥28 trillion fiscal stimulus package last Wednesday, there is also going to be an inherent expectation on their end for the BoJ to increase their own asset purchasing program, and possible further cuts into negative rates… Now lets not even bring up the words helicopter money!

Technically, price is still 500 pips off that swing low on the daily chart above, where price started rallying in expectation. That leaves a LOT of room for disappointment!

Checking the economic calendar the BOJ statement and the time is listed as tentative. Normally the release time is between 2.30 am GMT and 3.30 am GMT.

Common sense says that the longer the meeting stretches on, the more likely they are to be discussing details and therefore some sort of change (further stimulus) is coming. So the longer outside that time window we get silence, the more edgy and expectant on change USD/JPY will become.

Rumours, innuendos, Tweets, TV presenters poorly translated from Japanese etc are all going to be over-scrutinised, and we know how quickly a headline can move a thin market when traders click their platform first and ask questions later!

You’ve been warned.


On the Calendar Friday:
JPY Monetary Policy Statement
JPY BOJ Outlook Report
JPY BOJ Press Conference

USD Advance GDP q/q

Are you an active Forex trader? Make the switch to ECN Forex Broker, Vantage FX today!

Dane Williams – @VantageFX

Risk Disclosure: In addition to the website disclaimer below, the material on this page prepared by Forex broker Vantage FX Pty Ltd does not contain a record of our prices or solicitation to trade. All opinions, news, research, tools, prices or other information is provided as general market commentary and marketing communication – not as investment advice. Consequently any person acting on it does so entirely at their own risk. The experts writers express their personal opinions and will not assume any responsibility whatsoever for the Forex account of the reader. We always aim for maximum accuracy and timeliness, and FX broker Vantage FX shall not be liable for any loss or damage, consequential or otherwise, which may arise from the use or reliance on this service and its content, inaccurate information or typos. No representation is being made that any results discussed within the report will be achieved, and past performance is not indicative of future performance.


Free Daily Market Update

Live Spreads



Sign up to the latest forex news and daily FX trading setups

Get started with a FREE $50,000 demo account