Its Japan CPI day! (And some employment numbers). Our attention will switch to the BoJ from Monday to Wednesday next week as Kuroda meet to either continue with current monetary policy or give up all together and try something completely new. New policy would breath plenty of volatility into the market and since we have seen major markets challenge the Yen amid fear. The late NY session saw USD/JPY rise 0.7% in a sharp fashion to highs of 105.340. The setup is there for momentum to continue higher as moving averages edge up but the risk is in breaking 105.250. AUD/ JPY also has a positive setup as close at 80.10 brings DMA 81.24 target into sight.
AUD/USD was widely sold last night through both USD yields rose and after continued failing to break the 0.77 level. Despite the strong employment numbers and RBA Governors neutral statement there is still an edgy sentiment around Tuesdays rate decision. Personally I’d consider any cut now a surprise (feel free to disagree and tell me why). Technical’s are weak and the break of 0.7585 makes 0.7555 a target for shorts.
Oil settled at 49.72 after a 1.1% gain. The Saudi’s and their fellow friends from the Gulf (some not in OPEC) travelled to Moscow proposing a 4% cut which the Russians responded to by saying they wish to freeze production not just cut it. The main risk remains as a number of non-OPEC nations including Libya, Nigeria, Iran and Iraq want exemptions. The largest threat is Iraq who cite their fight with ISIS as a means to keep production high. A formal proposal will be made at the committee meeting in Vienna this week. Trade this on gut!
