Fundamental View

 UK data released yesterday surprised to the upside. Retail Sales in the UK surged by 1.1% m/m, much better than the -0.3% forecasted. Yearly basis, sales were up by 6.7% vs. the market’s forecast of 4.6%.

Even further, February readings were upwardly revised, providing Sterling short-lived support, with speculative interest reluctant to add longs amid Brexit uncertainty. For GBP Brexit still now is a major catalyst.

And GBP suffered from the inflation report. Headline Consumer Price Index stuck to 1.9%. The gap between salaries and inflation means households are better off, but the pound has fewer reasons to rise. Next week there is no market mover data for GBP.

All in all, UK data was slightly positive. Bur Brexit uncertainty hammering GBP.

The Bank of Japan trimmed its routine purchases of long-dated bonds today, so far, the central bank’s move has not had any impact on the JPY. JPY is almost neutral because of US10 year’s bond. Even good US data didn’t impact on JPY. North Korea launched a new tactical guided weapons firing test on Wednesday. Even this news didn’t impact on JPY.

Thursday, market talks indicated that BOJ was likely to revise its inflation forecast, now seen below 2.0% until March 2022. Also, at the beginning of the day, Japan released the preliminary April Nikkei Manufacturing PMI resulted at 49.5, still in contraction territory but slightly better than the previous 49.2. Japan will release March National CPI early Friday, seen up by 0.5% YoY. So fundamentally JPY is neutral.

25th of April JPY got massive market mover data. BOJ Business outlook report, Monetary Policy Statement and bank of japan press conference. As inflation is still less than 2.00% so there is no chance to hike rate. There was rumor that abe can hike tax. Monetary Policy Statement is depending on JGB bond purchase. If BOJ increase their bond purchase JPY will be strong, if not there a good chance to get weaker JPY.

Technical view

144.95 is key support area for GBP/JPY. If 144.95 breaks and stable next target 144.32 and final target is 143.95 area.

On the other hand, market is still caped by negative trend line. And H4 chart shows market has stabled bellow 100 and 200 moving average. Until break and stable 146.25 area market will be considered as bearish. If 146.25 breaks and stable next target 146.65 and final target 147.oo area.


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