Yen Pairs React to North Korea Missile Launch and Dovish Outlook

BoJ confirmed its ultra dovish stance until spring 2020

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“BOJ’s projected GDP growth rate in fiscal 2019 & 2021 was again slightly revised lower while growth in fiscal 2020 stayed unchanged. Growth for fiscal 2021 is now lower to 1.1% (from 1.2%), still the highest in three years”.

“The BOJ CPI inflation point estimates and the forecast ranges was mostly adjusted slightly lower across the forecast period. The effects of the consumption tax hike are still assumed to be “flushed out” by fiscal 2021 with CPI inflation projected at 1.6% in fiscal 2021, unchanged from Apr 2019 Outlook and still well below the 2% target”.

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USDJPY FX Chart
USDJPY 4H

USDJPY is currently trading in bullish flag channel withing a larger channel. THe dovish tone from the BoJ could signal a push higher to the larger channel resistance level. A break of support on the minor channel could see price push lower to the 107 handle

GBPJPY FX Chart
GBPJPY 4H

GBPJPY has taken a beating this week thanks to comments from the new elected PM Borids Johnson. Price broke out of a descending wedge pattern and has continued to fall since. A new break out the wedge pattern now will signal the the next push lower or the pull back to wedge resistance

EURJPY FX Chart
EURJPY 4H

The Euro has seen some relief this week and now with the dovish tone from the BoJ price has closed back within the daily range it had been stuck in for a few weeks. Today will either signal the push back to the top of the range or we will see price push back down and continue the major weekly bearish trend.

CADJPY FX Chart
CADJPY 4H

The Bank of Canada left its benchmark interest rate unchanged at 1.75% this month but highlighted the risks that trade wars pose to the global economy.

Canada’s gross domestic product data for May is due on Wednesday, with a Reuters poll forecasting a 0.1% increase, which could help guide expectations for the direction of interest rates.

CADJPY is trading in a bullish trend however it is trading on support and a break below the channel will push price lower to the daily support level. Alternatively a break and close above 4 hr resistance will see price push back to channel resistance level.

The Bank of England

The Bank of England is the central bank of the United Kingdom. It was established in 1694 and was privately owned in the beginning, the Bank was nationalized in 1946 so now is completely owned by the UK government. BOE’s main reason to be is to maintain monetary and financial stability in the country. Some of its other tasks are producing secure bank notes, operating asset purchase facility and keeping the inflation low and stable.

The European Central Bank (ECB)

The European Central Bank (ECB) is the central bank empowered to manage monetary policy for the Eurozone and maintain price stability so that the euro’s purchasing power is not eroded by inflation. The ECB aims to ensure that the year-on-year increase in consumer prices is less than, but close to 2% over the medium term. Another of its tasks is the one of controlling the money supply. The European Central Bank’s work is organized via the following decision-making bodies: the Executive Board, the Governing Council, and the General Council. Mario Draghi, a member of the Executive Board, is also the President of this organism.

The Federal Reserve Bank (Fed)

The Federal Reserve System (Fed) which is the central banking system of the United States. Fed has two main targets: to keep unemployment rate to their lowest possible levels and inflation around 2%. The Federal Reserve System’s structure is composed of the presidentially appointed Board of Governors, partially presidentially appointed Federal Open Market Committee (FOMC). The FOMC organizes 8 meetings in a year and reviews economic and financial conditions. Also determines the appropriate stance of monetary policy and assesses the risks to its long-run goals of price stability and sustainable economic growth.

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