Expectations of fresh stimulus from the Bank of Japan as early as next week’s Bank of Japan’s monetary policy announcement on July 29, helped underpin the
Expectations of fresh stimulus from the Bank of Japan as early as next week’s Bank of Japan’s monetary policy announcement on July 29, helped underpin the EUR/JPY early Wednesday. The Forex pair inched higher at 117.420, up 0.457 or +0.36%. It has traded sideways since July 15, which suggests it may have run into resistance, or buyers may have backed away ahead of Thursday’s European Central Bank meeting.
The ECB is scheduled to hold its regular policy meeting on July 21, its last before an eight-week summer break. The central bank is not expected to take any additional easing steps, but could sound a dovish tone, due to the impact of the U.K.’s decision to leave the European Union.
Although the ECB may sound dovish, it may not have too much of an effect on the direction of the EUR/JPY due to expectations of easing by the Bank of Japan, which is expected to weaken the Yen. If anything, a dovish ECB could limit the EUR/JPY’s short-term gains.
Japanese policymakers are unlikely to go as far as funding government spending through direct debt monetization, or “helicopter money” but might pursue a mix of aggressive fiscal and monetary expansion to battle deflation.
Earlier today, the Euro was underpinned by the news that German producer prices rose 0.4% in June, the same rate of increase for May and equaling the strongest pace of gains for two years with the data slightly stronger than the 0.2% gain expected by markets.
An uptrend may be developing in the EUR/JPY due to expectations of additional stimulus from the BOJ. However, gains may be limited by low volume and low volatility as investors continue to assess the potential impact of Brexit on the Euro Zone economy.
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Today’s economic releases:
Cur. | Event | Actual | Forecast | Previous | |
EUR | German PPI (MoM) (Jun) | 0.4% | 0.2% | 0.4% | |
GBP | Average Earnings Index +Bonus (May) | 2.3% | 2.3% | 2.0% | |
GBP | Claimant Count Change (Jun) | 0.4K | 3.5K | -0.4K | |
GBP | Unemployment Rate (May) | 4.9% | 5.0% | 5.0% | |
USD | Crude Oil Inventories | -2.100M | -2.546M | ||
USD | Cushing Crude Oil Inventories | -0.232M | |||
AUD | NAB Quarterly Business Confidence | 4 |
Upcoming Economic Events that you should be monitoring:
Thursday, July 21, 2016
Cur. | Event | Actual | Forecast | Previous | |
GBP | Core Retail Sales (YoY) (Jun) | 4.8% | 5.7% | ||
GBP | Core Retail Sales (MoM) (Jun) | -0.6% | 1.0% | ||
GBP | Retail Sales (MoM) (Jun) | -0.6% | 0.9% | ||
GBP | Retail Sales (YoY) (Jun) | 5.0% | 6.0% | ||
EUR | Deposit Facility Rate | -0.40% | -0.40% | ||
EUR | Interest Rate Decision (Jul) | 0.00% | 0.00% | ||
USD | Initial Jobless Claims | 265K | 254K | ||
USD | Philadelphia Fed Manufacturing Index (Jul) | 5.0 | 4.7 | ||
USD | Philly Fed Employment (Jul) | -10.9 | |||
CAD | Wholesale Sales (MoM) (May) | 0.2% | 0.1% | ||
EUR | ECB President Draghi Speaks | ||||
USD | Existing Home Sales (Jun) | 5.48M | 5.53M | ||
USD | Existing Home Sales (MoM) (Jun) | -0.5% | 1.8% |
James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.