Japan seems to have exhausted currency weapons

The theme over the last 1 week has been the yen. The Yen seems to be strengthening each and every day and there isn’t much that anyone can seem to do about it. We have had the usual jawboning from the powers-that-be in the Japanese government and the BOJ  but it seems to have had little effect on the yen so far. Now USDJPY is at a pivotal price of 100 and the markets are anxiously waiting to see what would happen next.

There has been a recent new report on the Nikkei that says that the Japanese government and the BOJ have lost all their weapons to fight the price and the strength of the yen. Usually, when the Yen strengthens, they start by giving out threats of intervention and in extereme cases, they spend billions of yen in intervening in the currency markets to weaken the yen further so that they have control over the price of the yen. But the report now says that they do not have the power or the finances to intervene in a large way anymore. This places the Yen in a dangerous position and could mean that the yen could strengthen further in due course of time and that USDJPY could be in for further declines.

Yesterday, we saw a good weekly setup on the GBPCAD which has already yielded over a 100 pips.

A weekly pin bar that was broken yesterday. This could lead to further gains in the pair and traders can wait for a retracement and go long with a SL below last week’s low. The pair is pushed by the strength of Yen and the slowing economy of United Kingdom.