USD/JPY: the downside after minister’s Aso speech

The Japanese MOF Taro Aso during his speech on the monetary stimulus in Tokyo said:

“The government will leave the definition of the monetary policy to the BOJ, hoping that it will reach the price target soon”

“The quantity of the economic package is still to be defined”

In line with this scenario, moreover, the Japanese government is considering the possibility to increase the expenses of 6tln, only 2 of which will be considered additional budget (against market expectations which were oriented to an increase from 20 to 30tln Yen).

On the forex side, after having touched the 105 level, the USD/JPY was on the ground to touch new lows to 104,60 before recovering some points after the bearish growth expectations by the government.

The downside pressure on the pair, even more, has accelerated during the Asian session closing, pushing down the price to the 8-days low, to 104. The recent Yen strength derives from the persistent uncertainty by the government on the quantity of the economic package, and it suggest to the market that the government shouldn’t be ready to sustain market expectations.

In addition, the Nikkei 225 losses are increasing the downside move of the USD/JPY cross.

Usd/Jpy 26Lug

With the pair trading at 104,29 at the moment with a negative performance of 1,40%, we can see important levels on the chart.

Technical Analysis suggest us that the first resistance could be find at 105,83 (10-DMA), broken which the pair should go to the second one at 106 (round number). On the opposite side, the first support level is seen at 104,16 (20-DMA) followed by the 103,89 one.

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The Oil recovery in a thin market

Views Of Tankers & Refineries As Oil Trades Near 12-Year Low

Photographer: Eddie Seal/Bloomberg via Getty Images

Both Oil benchmarks on both sides of the Atlantic made a sideway move during the last Asian session, but the trend of the Black Gold remains positive, with a slight upside fueled by limited volumes and the US market still closed for the Independence day.

At the time of writing Brent and WTI are traded slightly higher, respectively at $50.62bbl and $49.22bbl extending their consolidation during the European session and after Friday’s strong gains due to robust US ISM manufacturing PMI data and the fade away of the Brexit fears.WTI 4Jul

 

 

 

 

 

 

 

Brent 4Jul

Despite everything, during last hours, prices seems to have returned to the bid tone, also

fueled by the slowdown of the US Dollar which seems to have taken a break after the recent gains. (remember that a lower USD price is better for Oil purchases, because it makes it more “cheap” for the foreign investors).

The continuing tensions in Nigeria, moreover, are still limiting the upside of the commodity, after a drop of the production for the African Nation not seen from 30-years, caused by attacks from local militants, the Niger Delta Avengers.

Looking at the Russia, on the other hand, following words from the Energy Minister, the production has grown almost 1% y/y, with the June output on track to increase 1.14%, touching the 10.843 million barrels/day

Christopher Hainer, head of Oil and Gas at BMI Research said:

“If the production will remain stable, this could mean a record year for exports. This mean that the competition is still high, especially from Iran, which is providing Oil to the South Europe.”

Markets are now waiting for the weekly reports from API and EIA on the supply of Oil and the new incentives on the table, while Wednesday’s FOMC could still have an impact, even indirect, on the Black Gold.