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The common currency hammered to $1.1807 on upbeat U.S unemployment data, despite Fed Chair Powell's rejection of the monetary policy adjustment in the second-day testimony. A meeting between European Commission President von der Leyen and Irish Martin in Dublin is scheduled today to tackle NI protocol.
Sterling dropped to $1.3820, failing to derive support on hawkish comments from BoE policymaker Michael Saunders that the central bank could decide to halt its bond-buying programme early due to an unexpectedly sharp rise in inflation.
Yen loitered around 110 per dollar after BoJ kept monetary policy unchanged and downgrades FY 2021/22 economic forecasts. Attention shifts to Governor Kuroda’s comments at 10:30 for immediate direction.
Loonie heads toward lowest since April at 1.2614 per dollar after BOC's Macklem's reluctance to increase borrowing costs, coupled with an ADP report that showed Canada lost 294,200 jobs in June.
Aussie plummeted to $0.7410 on sour sentiment linked to Sino-American tussles, as Beijing rejects Sherman’s meeting while the US is ready to sanction China diplomats over Beijing’s crackdown on democracy in Hong Kong.
The South African rand fell to 14.53 per greenback amid lingering looting and riots pressuring local businesses.
The dollar-rupee staggered at 43(selling) on the Mauritian market.
10:30 - JPY - BoJ Press Conference
13:00 - EUR - CPI (Jun)
16:30 - USD - Core Retail Sales (MoM)(Jun)
16:30 - USD - Retail Sales (MoM)(Jun)
“ Its not that I am so smart. Its just that I observe the market longer. Patience is key to success.” - Anonymous
Policy statement from the US Federal Reserve certainly helped fuel a spike upwards in the USDJPY which topped exactly in the 110.80-111.00 resistance zone ( Based on our previous forecast on 28.05.21) before trimming most of its post Fed gains. What next?
The Bank of Japan kept its policy unchanged today and held its negative interest rate firm while also holding steady to its quantitative easing program in contrast with the FED. The special COVID program is also extended till March 2022. The lag in economic recovery has put institutions under stress , with BOJ responding that they will announce new loan measures in the near term.
The sudden burst of volatility and uncertainty will continue to prevail in the market in the coming sessions. The forex pair , hovering near critical values of 110.80-111.00, remains a key pivot in the near term. 110.80 marks a complete A-B-C corrections as per Elliott wave principle which coincides also with 100% Fibo Extension. A strong break and close above these levels could signal medium term buying in the USD amid breach of stop losses.
Shorts in USDJPY can be initiated in the region of 110.50-110.80 with a stop above 111 with targets towards 109 and 108 levels.