USDJPY: Hit with a roadblock, more downside to come – TDS

By FXStreet FXStreet (Delhi) – Ned Rumpeltin, European Head of Currency Strategy at TD Securities, suggests that USDJPY has been coiling in an increasingly tight triangle formation over the last few weeks and we now expect the next sustained move to be the downside and would be inclined to fade any breakout higher.

Key Quotes

“In Japan, PM Abe announced a new plan for reviving Japan’s flagging economy. Declaring Abenomics has entered a “new stage”, he stated his “three arrows” would now be a strong economy, child care, and social welfare.”

“Without a tangible roadmap on how to achieve this aim, we think he has significantly undermined the credibility of his economic programme in the eyes of the international financial community.”

“His assertion that Japan has “almost beaten deflation” does not help as both headline and core CPI annual rates have returned to near the zero mark now that the impacts of prior increases in consumption taxes have dissipated. Overall, we think this shift in focus will prove to be quite negative for USDJPY.”

“With the BoJ already expressing some discomfort with further monetary easing and internal doubts about its efficacy have started to reach the press, political pressure for them to do more next month …read more

Source:: FX Street