We had another one of central bank policy meetings. This time it was the Bank of Japan. It seems that recently the central banks follow the same script – rates left unchanged, followed by some jibberish amounting no other actions. For the BOJ it was “No new policy initiatives”. None had been expected. The rate was also left unchanged at symbolic 0.1%. And the BOJ “will aim to maintain the extremely accommodating financial environment”. One could conclude that the era of low interest rates is here to stay.

Just couple of hours ago New Zealand’s Consumer Prices were released. For the three months through June they increased by 0.3%, less that the economists consensus of 0.4% and the RBNZ forecast of 0.5%. The Kiwi was immediately punished, on fears that NZ central bank will be even more reluctant to raise its rates. Not a huge sell off but it could a start to something bigger. So, the rally in commodity currencies is either running out of steam or reversing. And this is happening on relatively minor negative news, just as I speculated in the Pound-Kiwi daily chart post. Any more fundamental announcements that fall short of predictions will probably result in bigger NZD-drop.

In case of NZD-JPY, the price formed what looks like solid support just above 62.50. Should this level be broken, the trend might continue for 100+ pips. My personal interest here extends only through Friday, because next week I’m taking time off from trading. More on that in next post.  So, if nothing happens before markets close for the weekend, this idea will be scrapped. In case a the order is filled, my objective is only 80 pips, which is possible in one day, why not? Another trade from these pages, long in GBP-CHF, will also be closed before the weekend. This position is moving slowly, or not at all- about break even right now- but it is not that unusual when using 4H charts. Good things, sometimes, take time.

Mike K.