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Forex: USD/JPY with violent jumps, now above 95.00

FXstreet.com (Barcelona) - Despite the announcement of a new monetary policy framework and more easing than expected from the BoJ, the USD/JPY took its time to switch from a numb state just below 93.00 to jump above the 94.00 handle. After a few moments, the pair went for another leap, this time to 95.44, but noticeably retraced back. Markets are positioning themselves to this surprise action.

The BoJ is now targeting the monetary base rather than the overnight call rate. Surpassing market consensus of 10y point, Rinban operations and the JGB component of the Asset Purchase Program were folded into a new purchasing program with the authority to buy all along the JGB curve - even out to the 40y point. The BoJ expects its total holdings of JGBs to rise to Y140 trn by end-2013, Y26trn more than the previous guidance. JGB holdings are now forecast to rise a further Y50 trn during 2014.

“Minor resistance comes in at the 95.25 near term resistance line ahead of 96.14 and the 96.71 March high”, wrote Commerzbank analyst Karen Jones, pointing to longer term target at 99.70 (50% retracement of the 2007 to 2011 drop) and then 101.27/67 (the 1999 and 2005 lows).

Asian markets down on North Korea, Japan rises on BoJ easing

As promised, the BoJ changed to a new monetary policy framework, now targeting the monetary base rather than the overnight call rate. Surpassing market consensus of 10y point, Rinban operations and the JGB component of the Asset Purchase Program were folded into a new purchasing program with the authority to buy all along the JGB curve - even out to the 40y point. The BoJ expects its total holdings of JGBs to rise to Y140 trn by end-2013, Y26trn more than the previous guidance. JGB holdings are now forecast to rise a further Y50 trn during 2014. Japan’s Nikkei Stock Average rose by +1.33%.
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