Jump to content

JPY Q1 2022 Fundamental and Technical Forecasts


Recommended Posts

JPY Q1 2022 Fundamental Forecast: USD/JPY, Fed, Labor Market Eyed

How to Trade USD/JPY? - R Blog - RoboForex

JAPANESE YEN FOURTH QUARTER RECAP

The anti-risk Japanese Yen had a mixed performance against its major peers throughout the fourth quarter of 2021. It weakened against haven-oriented currencies, such as the US Dollar and Swiss Franc. On the other hand, it found some strength against growth and cyclical-sensitive currencies such as the Australian, Canadian and New Zealand Dollars as volatility hit stocks.

INFLATION AND THE FED REMAIN THE FOCUS IN Q1 2022

For USD/JPY, the road ahead in the first quarter of 2022 will likely remain heavily glued to market expectations of how hawkish the Federal Reserve will be – see chart below. In December, the central bank doubled the pace of tapering asset purchases, which will now see it end in early 2022. This will likely give the central bank maneuverability should it need to raise rates sooner than expected.

This will of course depend on how inflation evolves. Headline price growth is at its fastest pace in almost 40 years in the United States. Expectations are that price growth will remain above the central bank’s target next year, with Core PCE running around 2.7% in 2022. However, a key risk could come if inflation expectations become “de-anchored.”  

DECEMBER 2022 FED RATE HIKE BETS VS. USD/JPY

USDJPY December 2022 Rate Hike Bet

Chart Created Using TradingView

THE LABOR MARKET MAY KEEP THE FED ON ITS TOES, WILL USD/JPY RISE?

When inflation expectations are anchored, it typically means that short-term price growth does little to impact long-run estimates. This could be due to people expecting the Federal Reserve to maintain its inflation target down the road. However, if consumers anticipate inflation to linger instead, then those estimates can become “de-anchored”.

This can occur when workers, facing high inflation, demand higher wages to combat losing purchasing power. Businesses can respond by driving up costs of products to counter paying higher salaries. This creates a spiral -- difficult for a central bank to counter. With that said, the Federal Reserve has ample room to tighten monetary policy given how loose policy has become in the post-Covid world.

How does the US labor market look? As the chart below shows, the labor force participation rate remains stubbornly below pre-Covid levels. This is despite the country recovering about 80% of jobs lost since the Covid shock in 2020. On the plus side, jobless claims are at their lowest since 1969 while the number of openings is at their highest on record.

These trends hint that the country might be able to accommodate a surge in labor force participation without bringing up unemployment too quickly. If new workers entering the labor force seek higher wages amid elevated inflation, then salaries could rise, pushing up prices and opening the door to a more hawkish Fed. That could keep the focus for USD/JPY tilted upward. Another consequence might be more stock market volatility. This is something the JPY may capitalize against AUD, CAD and NZD.

WATCHING THE US LABOR MARKET IN 2022

US Labor Force Participation Rate

Chart Created Using TradingView

 

By Daniel Dubrovsky, Strategist, 26th December 2021. DailyFX

Link to comment

JPY Q1 2022 Technical Forecast: USD/JPY Chart Points Higher to Kick Off the Year

USD/JPY Forex Technical Analysis – Omicron Uncertainty Traps Traders  Between 114.029 and 113.173

YEN WEAKNESS LOOKS SET TO CONTINUE AFTER USD/JPY RECORDS STRONG Q4’21

The Japanese Yen saw significant weakness against the US Dollar in 2021. USD/JPY gained in all but three months last year, with the currency pair hitting the highest level since January 2017 in November. US Dollar bulls controlled the narrative in Q4 2021, which puts prices on a strong footing to rise further in the new year.

USD/JPY made several key technical victories last year, including a climb above a descending trendline from the early 2017 swing high. That trendline capped upside movements in the pair for the preceding year until March 2021, when prices pierced above the level. The 200-week Simple Moving Average offered confluent resistance, but the levels turned to support, and prices subsequently broke higher. That strength saw a clean break above the psychologically imposing 110 handle.

USD/JPY MONTHLY CHART

USD/JPY Monthly Chart

Chart created with TradingView

USD/JPY DOWNSIDE APPEARS LIMITED WITH ROBUST SUPPORT

The weekly chart highlights possible levels of resistance and support that may appear in Q1. The 61.8% Fibonacci retracement level from the 2015 high to 2016 low has already showed to be a sticky point in Nov. A break above that, however, puts focus on the late 2016 swing high at 118.665. Shortly above that level lies the 78.6% Fib, with a full retracement to the 2015 multi-year high serving as the next likely resistance point.

Alternatively, a move lower has several potential support levels. The rising 100-day SMA offers the first line of defense against a bearish move, with the moving average tracking shortly below price levels in December. The 200-day SMA sits in a nearly confluent position along the 110 psychological handle and the 38.2% Fibonacci retreat. The 2017 trendline comes into play just below those levels.

One point of concern is a negative divergence between prices and the Relative Strength Index (RSI), highlighted in red in the chart below. The divergence suggests that upside energy may be waning. USD/JPY bulls will want to see RSI break above the level around 75.54 the next time prices rally higher to break the negative divergence.

USD/JPY WEEKLY CHART

USD JPY Weekly Chart

Chart created with TradingView

By Thomas Westwater, Analyst, 25th December 2021. DailyFX

Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • General Statistics

    • Total Topics
      19,987
    • Total Posts
      87,947
    • Total Members
      69,139
    • Most Online
      7,522
      10/06/21 10:53

    Newest Member
    waynemax
    Joined 25/09/22 10:27
  • Posts

    • Hey @pravid17 I hope you're well.  In the leveraged trading industry there are brokers who don't hedge client's exposure and brokers (like ourselves) who do hedge client's exposure.  In a perfect world the exposure of short clients would net off the trades of long clients however this is not always the case. Our hedging model allows us to take an exposure in the underlying market for the remaining exposure which doesn't offset - This way we don't need to hedge every trade, worry about profits of our clients and results in lower costs for hedging in the underlying market (commissions, interest etc.). So say 60% of IG customer exposure in the ASX was long and 40% of exposure on the ASX was short. The 40% would net each other off but there's a remaining 20% of customers who need to be hedged to cover their positions. We go into the market and hedge this.  We make our money primarily through our spreads and overnight funding  with other fees making up a small proportion of our revenue. I would like to remind also that IG is regulated by several bodies globally, including top-tier regulators like the UK's FCA, Germany's BaFIN, Australia's ASIC - This should be quite reassuring from a dealing execution and transparency perspective.  I hope this helps, let me know if you have any other question 
    • A survey from Reviews.org, which featured 1000 Americans, found that as many as 1 in 4 US subscribers may quit the service in the next year.    Jeremy Naylor | Writer, London | Publication date: Friday 23 September 2022  There was an interesting breakdown, but the main reason was affordability. Only 18% said they would move to a cheaper competitor. IGTV’s Jeremy Naylor looks at the numbers. Netflix subscription woes Netflix Inc (All Sessions) could be in for a rough time ahead over the next 12 months if a new survey is anything to go by, which was conducted in the US. Out of the 1,000 adults that took part in this survey undertaken by Reviews.org, around 25% of those that were covered said that they would be cancelling their Netflix subscription within the next 12 months. Now, it says with that 25% of US subscribers to Netflix considering leaving, not to join a competitor, but mostly because of pressures on household bills. This is how it is split: rising cost of subscriptions - 40% inflation - 20% a lack of content - 22% spending more time on the services of others - 18% So you can see, a minority said they were going to other services, such as those provided by Disney Plus or Amazon Prime. The cost of Netflix has risen dramatically this year as its basic plan increased by 11% in January and its other plans by 20% to 25%. Now these were the first price increases for three years, so that itself is relatively new for a lot of subscribers. Netflix share price Let's take a look at the Netflix share price. You can see on the far left hand side of this chart the COVID lows at $290.39. We saw a whacking great increase there of 141% to the top and the record high in Netflix shares back in November 2021. And that was when subscriptions were rising, people were paying more for their services, and it was all humming beautifully. And then all of a sudden people started questioning the numbers of streaming services they were undertaking with some deciding to withdraw from Netflix. All of a sudden the big drops started coming through with profit warnings and sales warnings. We've recently hit a new low of $162.50. Since then there has been a little bit of an increase. We're currently trading at $232.75, but we are down by a margin of 1.75% in today's session, which reflects this news that we could well see a relatively large drop in subscribers for Netflix in the US within the next 12 months.
    • Market data to trade the week of 26 September: Nasdaq; NXT From the economic calendar next week IG technical analyst, Axel Rudolph, picks up on a short trade on the Nasdaq around US inflation data. Meanwhile, despite another light week of corporate data, Axel picks out the chart of Next plc (NXT) as an interesting trade to think about.          
×
×
  • Create New...