The possibility of a policy bias pivot for the BOJ strengthened the yen earlier today.
What does this mean for GBP/JPY’s downtrend ahead of this week’s U.K. data releases?
Check out what’s cooking in the 15-minute chart!
Before moving on, ICYMI, I’ve listed the potential economic catalysts that you need to watch out for this week. Check them out before you place your first trades today!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
Over the weekend, China’s data showed (slightly) easing deflationary pressures helped in part by summer travel. CPI rose by 0.1% y/y in August (vs. 0.2% expected, -0.3% previous) while producer prices fell by 3.0% (from -4.4% in July)
Over the weekend, BOJ Gov. Ueda gave an interview with Yomiuri and implied that the central bank may have enough information about wage hikes by the end of 2023 to possibly reevaluate its monetary policies.
Over the weekend, U.S. Treasury Secretary Janet Yellen repeated her confidence over the U.S. avoiding a recession while reining in consumer price gains, and added that some easing in the labor market is “important and a good thing.”
The PBoC set the USD/CNY reference rate at 7.3437 vs. the market projected rate of 7.2148. The record-high gap underscored the central bank’s aggressiveness in defending the yuan’s strength.
Chinese banks extended 1.36T CNY worth of new loans in August (vs. 1.20T CNY expected, 345.9B CNY previous)
Japan’s machine tool orders dipped by 6.3% m/m in July (-19.7% y/y) and marked its first monthly decline in two months.
Italy’s industrial output fell by 0.7% m/m in July (vs. -0.2% expected, 0.5% previous)
Price Action News
Overlay of AUD Pairs 15-min Chart
The Japanese yen started the week on a strong note thanks to weekend hints by BOJ Governor Ueda of the central bank possibility reevaluating its policy biases as soon as the end of 2023.
But it was the Australian dollar that saw the most gains with the New Zealand dollar not far behind.
And why not? Aside from an extension of the anti-USD wave in late Friday trading, the commodity-related currencies also likely found support from Chinese data. The PBOC announced a USD/CNY fix that marked its biggest gap against market projections while a separate report showed new bank loans coming in stronger-than-expected in August.
AUD snagged pips across the board and made the most intraday gains against the U.S. dollar and European currencies like EUR, GBP, CHF.
BOE Chief Economist Huw Pill to give a speech at 8:00 am GMT
New Zealand’s visitor arrivals at 10:45 pm GMT
Australia’s Westpac consumer sentiment at 12:30 am GMT (Sept 12)
Australia’s NAB business confidence at 1:30 am GMT (Sept 12)
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
GBP/JPY 15-min Forex Chart by TV
I don’t know if you’ve noticed, but JPY started the week strong thanks to some comments from the BOJ Governor that may be interpreted as possibly hawkish.
GBP/JPY, in particular, opened the week with a bearish gap and marked new intraday lows near 182.70 before GBP bulls stepped in.
Are we looking at a chance to jump in GBP/JPY’s downtrend at a better price?
GBP/JPY bears may look at the 183.80 zone, which isn’t too far from today’s Pivot Point line and a trend line resistance that’s been around since last week.
A rejection at the resistance zone opens GBP/JPY to a move back to its 182.80 previous lows.
That, of course, will depend on how long the current risk-friendly trading environment is sustained.
If we start to see disappointing economic reports, or investors start worrying about high interest rates and global growth, then GBP/JPY may turn lower and extend its downtrend.
But if we see more risk-friendly headlines in the next trading sessions, then GBP/JPY may hit the 184.40 previous high or higher inflection points before seeing sustained selling pressure.
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