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21 Oct 2013
Session Recap: Digestion of last week’s big moves and disappointing Japanese data dominant themes
FXstreet.com (Barcelona) - Japanese data points trickled in during the Asian session and almost uniformly provided Yen bulls with a heaping serving of disappointment. Outside of the Yen pairs, most of the trading Friday and thus far in the Monday session has been spent digesting the big moves that occurred late last week.
Japan starting to really be consistent with their ability to disappoint
The Japanese Trade Balance data that came out showed the largest trade deficit for Japan in the 20 years that Bloomberg has been tracking the data. That alone would be Yen-bearish. However, both the imports and exports came in lighter than expectations – indicating to many analysts a general economic slowdown and not just a relative slowing in exports.
If the trade data weren't enough to depress Japan / Yen bulls, just a short while ago the Japanese All Activity Index chimed in with more (economically) bearish tunes.
The combined data seem to be a sign that Prime Minister Abe and his colleagues might have to stop hinting at recovery and some far-off necessary tightening and just bolt the gas pedal to the floor in terms of monetary policy. They may even have to consider putting some of their fiscal austerity measures – such as increasing sales taxes – on hold as well.
Trading action in the majors says big moves from Thursday are being digested
When we scan the futures charts of the major forex futures, we only see non-descript action indicative only of consolidative action of Thursday’s sharp moves. Technicians say the DXY almost certainly has more downside ahead of it but that traders may be reticent to trade heavily in front of Tuesday’s US jobs report for September. With a relatively quiet data schedule for Europe and the US Monday, traders seemingly have a very good reason to either sit it out completely or to just trade lightly in front of Tuesday.
Japan starting to really be consistent with their ability to disappoint
The Japanese Trade Balance data that came out showed the largest trade deficit for Japan in the 20 years that Bloomberg has been tracking the data. That alone would be Yen-bearish. However, both the imports and exports came in lighter than expectations – indicating to many analysts a general economic slowdown and not just a relative slowing in exports.
If the trade data weren't enough to depress Japan / Yen bulls, just a short while ago the Japanese All Activity Index chimed in with more (economically) bearish tunes.
The combined data seem to be a sign that Prime Minister Abe and his colleagues might have to stop hinting at recovery and some far-off necessary tightening and just bolt the gas pedal to the floor in terms of monetary policy. They may even have to consider putting some of their fiscal austerity measures – such as increasing sales taxes – on hold as well.
Trading action in the majors says big moves from Thursday are being digested
When we scan the futures charts of the major forex futures, we only see non-descript action indicative only of consolidative action of Thursday’s sharp moves. Technicians say the DXY almost certainly has more downside ahead of it but that traders may be reticent to trade heavily in front of Tuesday’s US jobs report for September. With a relatively quiet data schedule for Europe and the US Monday, traders seemingly have a very good reason to either sit it out completely or to just trade lightly in front of Tuesday.