USD/JPY Discussion

Flirting with 107.5 2 times already today. She want to break the resistance but just cant seem to do it.

got few more low risk long entries. Thanks to fork.
Eat the pips with Fork.

i am off to some peaceful sleep now

Japan will fall under the crossfire in the trade war between the US and China

The results of the first term of Haruhiko Kuroda as head of the Bank of Japan can be summed up in two words: the deflationary mood.
In 2013, the head of the Central Bank set a goal to end decades of deflation through unprecedented monetary policy measures that the markets had never faced before.

But his second term, which begins this week, can be characterized in completely different two words: Donald Trump.

In recent weeks, Kurda has stopped hinting at the prospect of getting out of the most aggressive program in the history of quantitative easing. Conversations about the winding up were replaced by expectations that the head of the regulator could go the other way and take steps to contain the yen and protect exporters. However, the markets too early began to talk about the change in rates, given the current behavior of Trump, which threatens the global economy. His policy of a weak dollar, the escalation of the trade war and the unpredictable manner of decision-making complicate the "reflation problem" of Tokyo.

Politics of the White House hits the economy of Japan
The latest Tankan study showed that the mood among the largest Japanese industrial enterprises fell for the first time in two years. It is no coincidence that in the first quarter the White House finished with the 23-year-old policy of a strong dollar (since the beginning of the year the yen has risen in price by 5%). And now Trump remembered the Smoot-Hawley tariff of the 1930s. and began to threaten import duties.

First he spoke about tariffs for imports of steel and aluminum (25% and 10% respectively). Then the president announced a plan for imposing duties on imports of goods from China worth $ 50 billion, including in the list of heavy machinery, batteries, semiconductors, motorcycles, etc. But it seemed to Trump a little, and he decided to come up with duties for another $ 100 billion. While China reacts quickly and confidently, having checked restrictions on imports of American goods by $ 50 billion. In the framework of this game, titled "tooth for tooth", Chinese leader Xi Jinping expressed readiness to certain hardships in the short term in order to rebuff the president along with his slogan "America first!".

Trade conflicts of Washington press on the stock markets
The escalation of tension between the two key trading partners of Tokyo puts the Bank of Japan in a difficult situation. Kuroda began in 2018 with the mood to exit incentives. Japan is experiencing the second longest period of economic growth, and corporate profits are encouraging. And the head of the Central Bank hoped that his second term would be marked by the normalization of monetary policy. The Reuters survey last month showed that 74% of the companies surveyed believe that it is time for the regulator to think about getting out of the stimulus and begin to cut annual bond purchases, which now amount to 80 trillion yen ($ 747 billion).

But since January, several new circumstances have appeared, and almost all of them are the work of Trump. The most obvious alarm is the decline in the Nikkei Stock Average. After a breakthrough of 19% in 2017, Nikkei follows American stocks to the south, losing 5% since the beginning of the year. The aggressive trading rhetoric of Trump and his impulsive publications on Twitter suppress optimism about the tax reform approved in December. This chaos also overshadows the prospects for wage growth.

Trump drives Kuroda into a corner
On April 3, Kuroda tried to let the markets understand that the curtailment of incentives should not be discounted. As part of his speech in parliament, he noted that "various options for exit strategies are being discussed within the Central Bank." But stock markets are puzzled. Recent data clearly signal that without record purchases of the regulator, the situation on the sites would have been much worse.

In March, the Central Bank bought an ETF worth $7.8 billion, the highest volume since late 2010. Since the appearance of "Abenomics" at the end of 2012, the Bank of Japan is a larger buyer of shares than foreign investors. And now, when they leave the market, the role of the Bank of Japan as a patron becomes even more pronounced, which can not but cause concern.

As of the end of last year, the Japanese Central Bank was holding about 75% of the ETF. The regulator can not support the stock market of the third largest economy in the world indefinitely. The participation of the bank in the bond market, where it holds 44% of the securities, will one day turn into something that simply will not have anything to trade. By the way, on March 13, no transactions with 10-year bonds were recorded.

Kuroda has driven himself into a dead end. Any hint at a reduction in the volume of purchases of debt obligations will provoke a sharp increase in the yen's rate and bond yields. The growth of the currency will hurt the exporters and weaken the prospects for the growth of wages. The increase in profitability will make it more difficult to service the country's debt, which is more than two and a half times the size of the economy. A further increase in the debt burden will further undermine the secondary market and make it harder to turn off incentives when the Central Bank decides to take this step.

The same is true for ETFs. Reducing ownership will entail a collapse of the Nikkei and Topix indexes, which will drag the indicators of economic confidence. If the regulator continues to buy ETF, it will be like the Bank of China, which buys shares to stabilize prices, as it was in 2015. The way out of this situation would be difficult even in good times. And now, in the light of Washington's attacks, it looks almost impossible. On the one hand, the new head of the FRS, Jerome Powell, promised three or four rate increases this year. On the other hand, the head of the Ministry of Finance, Stephen Mnuchin, is in favor of weakening the dollar. And Trump meanwhile is playing his game on Twitter, at which anything can happen.

China can aggravate the case
One should also take into account the ways in which the American president tries to revive the 1930s, because this can indirectly harm Japan. In that era, legislators passed a law on the Smoot-Hawley tariff, which turned the recession into a Great Depression. Of course, no serious economist today expects this scenario to be repeated exactly, but a powerful rebuff from China may trigger Trump on additional steps. And such reasons can appear. For example, the Chinese ambassador to the US Cui Thiankai hinted that Beijing could reduce purchases of US government bonds.

If China takes this step, the dollar will fall sharply, which will only complicate Kuroda's task, because Tokyo owns US debt securities by almost $ 1.1 trillion. Further yen appreciation will strengthen the deflationary mood, which the regulator wants so hard to overcome. But do not blame Trump on all. Prior to his inauguration in January 2017, Abe had 49 months to reduce bureaucracy, reduce government intervention in industry, modernize the labor market, stimulate innovation and empower women. Major victories in any of these reforms could better prepare the country for the threats that are now looming over the Bank of Japan.

WTF?

An eye, make sure to keep, hmmmmm

This girl broke the infamous 107.5... Where do y'all think she will get stuck at next? My count is 108.5 as next resistance?

I missed this chance to go long. Would have been a scalp, but high probability. I simply was not at my computer when it set up. Good bullish outside bar right at the high of the sellers of the last move down.

I sold 107.68
I hope there will be enough one position.

Good morning all.It might push for a few pips more post london close!Have tight stops if u go long.Good luck.

Word of the day: Pee Pee

I have 2 different signals for short. the firs one is the A fib uj is notorious for slipping past the larger one to a minor, and the harmonic.

Every time the markets get any kind of upward momentum somebody has to say something and that someone is almost always .... you know who.

Anyway I like it because the markets take the local train going up and the express going down.

gbpjpy short @ 153.526

still looking bullish today, unless it falls below 107.5

Maybe I get my soup today?

USD/JPY is close to double top at 107.90.

"I dislike Marijane and my stance on it is unalterable!"

Here, have a pile of money and join our board Mr Boehner!

"I love Marijane and think it's wonderful"

Hilarious!

Saw that.

He is always crying. Maybe for now on he will always be smiling.

Maybe he realized he enjoyed the wacky tobaccy more than his Johnny Walker.