Daily GBP/JPY analysis

what kind of fundamental data or news can give gj a trend reversal do you think?

I'd say G7 meeting this weekend. I bet there will be some discussions about the yen weakness.

A TREND REVERSAL? Gees.. that's powerful...

As we speak GBP is biased up backed on strong economic performance.

So market would have to face a strong short sentiment in GBP, fuelled by the possibility of deflation and thus, rate cuts. By now, the sentiment is exactly the opposite: Market is expecting another rate hike to 5.50% and will take it as the year's top. If this next hike succeed in controlling inflation, good. If its effects exceeds the control or for some other reason, GB face a economic slow down or recession, then we will start seeing GBP in a downtrend.

That's why I don't rush in declaring trendlines broken and trend reversals. The fundamentals behind a currency are not only the month's CPI, Retail Sales, NFP. But also how the overall economic data is (also) trending for months or years.... That's P-O-W-E-R-F-U-L.

Right now, GB inflation is at the upperside and above 3.0 BOE King will have to give the QUEEN an explaination . Check more here: http://www.forbes.com/afxnewslimited...fx3373584.html

Can you imagine the size of the DISASTER required to reverse this currency fast?

At the same time, "Yen weakness" is so strong a sentiment that every eve of G7 summit this GHOST starts walking around the market as a possible "theme" to be discussed.

The super low interest rate in Japan also works in favour of Yen shorts, via carry trades. You borrow a 0% IR currency and lend USD or GBP at ±5% to the stock market, this is a HELL OF A DEAL

Again, only with strong fundamentals that lead Japan to increase rate - don't need to be too much at a time, but constantly (again trend) - may bring a Yen long sentiment to the table.

Much easier for us to go on "buying our little dips" than spend much more than those kbites to figure out when these things are going to happen.

Not to mention the USD, but "that's for another beer" as we say here.

i'll keep my eyes on the G7 jimbo.

cesarnc, appreciate the reply.

hahaha, cesarnc...

I believe you are spot on with the analysis...when price breaks the support points there have to be a reason for it, a correction at this level is pretty much e case but to have it as a a reversal will require a strong fundamental shift. With China creating further trade surplus to fuel their econ, further devalueing the US currency, we can only see a futher downsizing of the Yen...come to think of it again, this is really good for Asian countries and it could spur further trade growth in the current booming Asian economy. In my opinion, the depriciation of the Japanese currency is inevitable.

The only cup of tea for our samurais are natural disasters and war declaration for a strong U-turn. Deflation will take time and will only induce further volatility and speculation due to all round weakness of the world's major economy. So... thank god we have the Pound to bring us somewhere with the carries.

Jest

[DLR/YEN]'s last Fri's 119.39 remained hard to clear till the mkt reacted to IMF's comments in NY time that Yen carry trade needs no intervention, and the pair soared through the Tky/Ldn highs of 119.31/29 and the tough 119.50 barriers to 119.53. US and European names led the decisive move. After easing to 119.26, the pair shot up again to 119.55 on the FOMC minutes that showed members agreed further rate hikes might be needed to curb infl amidst rising US yields. No comments from Europe on G7, so the mkt seems betting on no Yen discussions at G7. H/ever caution still needed as we have still a few days to G7 that sometimes brings a surprise. Good Japanese offers at 119.60-80 are reported amidst talk of 119.60 stops and 119.70 barriers.

Added longs at 235.65,.....

I am not very experienced with GJ. With the negative GBP news that just came out, is it still likely GJ will rise above 236?

Added to longs, too...

236.20 next possible target,.... then 236.60,...

Seems like we are hostages of UJ at 119.50. Needs to push through this price.

I see strong divergence on H4, this uptrend is weakening.

We may still see 236.60 (76 fib from Feb high @ 241.50 to March low @ 221) but I am struggling to see it go higher than that.

Yup,... We need UJ to break 119.50 and GU to retest 1.9800 level,...

In more detail, the [BCC"S Q1 QES] shows the [UK] manuf sector easing off somewhat with investment in plant and machinery slowing on the quarter (to 18 from 23), though profitability was up (to 40 from 37).

The number of firms at full capacity also rose to 41 from 36 and pay settlements increased to 32 from 30. On the services side, the employment outlook improved significantly with the balance for the next 3 months rising to 28 from 22.
Investment balances were also higher on the quarter with the number of firms at full capacity rising to 42 from 40. The BoE/MPC is likely to take the breakdown of this survey on board, not least due to its detail on both sectors.

Another 25 bp rate hike in May still looks likely indeed (Bank rate up to 5.5%).

Appears to have stalled again. Todays price range has been stuck in a short pattern again, much like earlier this week and the end of last. 62 pips from top to bottom. yuck. Hoping for the GJ to back to its daily moving averages again 148 plus.

I started banking profits in GJ already. 2 longs from y'day and today's dips 235.50/60

Will resume longs on clear break of 119.50 and cable above 9770 in the minimium.

Dollar is being main theme recently. USD index breached support during yesterday's big selloff at Tokyo open. This is likely to inspire new USD sales during the day, not favouring UJ longs.

But above 119.00/20 (and GJ accondingly) I'm buying dips.

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http://www.forexfactory.com/images/icons/icon1.gif UK trade deficit widens
The UK trade deficit widened to GBP6.8bn in February from a revised GBP6.4bn in January while the overall goods and services deficit rose to GBP4.1bn from GBP3.8bn. The deterioration was caused primarily by high imports with export levels holding firm to the EU. There was, however, a 2.0% drop in exports outside the EU which will raise concerns that Sterling is uncompetitive at current levels against the dollar.

The deficit was worse than expected and is slightly Sterling negative, although trade issues should not be a major short-term problem, especially with optimism over capital inflows. The longer-term risks should not be ignored.

The British Chamber of Commerce (BCC) also called for the Bank of England to resist a further increase in interest rates as they stated that a further hike could cause major risks to the economy. A drop in yield support is a bigger short-term risk factor for Sterling, especially given the global focus on carry trades.
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Analysis by Investica LTD

Trichet On Bullshit Regarding Yen...

F****ing Trichet,... got stopped out,...

"09:01 TRICHET- JAPAN IS RECOVERING, FX RATES SHOULD REFLECT FUNDAMENTALS" - read: Yen is weak

He had to bring it up just ahead of G7... He just had to....