Yen To Dollar - Daily Prices Candle Chart January 29th 2009

Yen To Dollar - Daily Prices Candle Chart January 29th 2009

Trading doesn’t get any easier in the yen to dollar pair at the moment. Yesterday saw an up bar formed on the daily candle chart, following the release of data from the FOMC and the FED Funds Rate decision which was a “hold” for the future. My suggestion would be the same as yesterday – in other words stay out of this pair until we have a confirmed move,. The general trading direction is still sideways at the moment, and until we either have a break to the downside, or a break above from the double bottom, it is extremely difficult to forecast anything with a degree of confidence or certainty. The only point I would make is that yesterday’s price move did break the 9 and 14 day moving averages, and could now approach the 40 day average. If this is penetrated and the move confirmed then this could see prices move higher, but I’m afraid we will have to wait and see.

There is a raft of data due to be released this evening in Japan. Whilst none of the figures are major market movers in terms of their effect on the home currency, they will have an effect, with the most important being Household Spending, Tokyo Core CPI, and Preliminary Industrial Production. The first of these, Household Spending, measures the change in the total value of inflation-adjusted expenditures by consumers – the previous figure was -0.5% and the forecast is for -3.6%. It goes without saying that consumer spending has an affect across the entire economy, so this is an important indicator and if the actual beats the forecast then this is generally good for the currency. The next is Tokyo CPI, not to be confused with the National CPI figures, but nevertheless as Tokyo is Japan’s most populated city, it does provide a guide to the main CPI figures. The forecast is for 0.6% against a previous of 0.8%, and again if the actual beats the forecast then this is generally good for the Japanese Yen. Finally we have PIP, which is a leading indicator of economic health. Again not one of the “major” pieces of news, but important in itself in that it measures the change in total inflation on a monthly basis, and can provide early signals of a growing or shrinking economy. Again if the actual exceeds the forecast then this is good for the currency.

The short term outlook is sideways, the medium term sideways, and the long term bullish