GBP & EUR daily is currently in sideways market because still trying to break free of bearish pressure in order to breach previous highs. JPY in sideways market too because of a major bullish re-trace well within bearish territory. In short, US treasury secretary mentioned of wanting a stronger USD but in short term, sentiment and actions following it will contribute to USD being oversold and temporarily weakened by market forces before the real effects of a strengthened USD (even temporary) from US capitalist mechanism namely US inflation control is materialized.
Concurrently, nations of other major currencies will have to rejuvenate exports [devalue currency] in order to have better rate of USD to get better conversion rate back to their own currency. This will be true except for Japan because it does not care much for increased exports in order to devalue the YEN, something Japan is very good at doing; not being able to devalue the YEN. Japan seems to believe that other countries will still buy Japanese products regardless of price [at least to a limit where profit is optimized for the Japanese]. Japan’s economy today also seems more focused on minimizing business cost than trying to expand an already optimized export market. Stronger Yen means more purchasing power for the Japanese corporations and population.
Still, some leeway to the USD may be given; just enough to keep importers of Japanese goods continue purchasing. This is supported by the recent announcement by the Japanese Central Bank that the Japanese economy is expected to contract in the rest of 2009, more reason for the maintenance of Japanese exports to be a priority for Japan. Japan, like the US also has trillion dollar levels of Japanese bond debts, something that a contracting economy will struggle to repay.
Nonetheless, the last thing Japan needs now is inflation, resulting from an overly weakened YEN. The Japanese population must be kept happy with decent buying power. The population is critical to an efficient economy. Nobody likes to work when they buy much less things with the same pay. Thus Japanese inflation control will show. Therefore, expect efforts to slight weakening of Yen against USD to maintain Japanese exports while balancing inflation control.
Hypothesis scenario: Yen strength to bottom out after a month or two and its devaluing controlled to find stability against USD
Ideal chart outlook: Range-bound long term sideways within JPY territory for the final quarter of 2009
US require a sublime balance of inflation control and export rejuvenate to assist in optimal economic recovery – pleasing both its general population and corporations. There is suspect that EUR and GBP will move according to this US tune – a.k.a. won’t be using the USD as a punching bag as in the past, at least for the rest of 2009 and possibly until their own economy gets back on track. By looking at the global economy this way, it seems that the only way for USD to regain control as top global currency was to crash the US economy.
This conspiring move, to significant effect had weakened other main currencies and their economies. For medium term I will be looking for overbought EUR and GBP on daily charts for bear entries. The new bear opportunities will be the point when current weekly term bull will be closed due to failure of bull range to continue. It is imperative to find prudent bear weekly term opportunities for EUR and GBP markets to carry over into a major bear breakout in the final quarter of 2009. A Bullish bias for USDJPY toward the end of the year is forecasted.
Disclaimer: Trading in the FOREX market & other forms of investments involves risk. This information should not AT ALL be viewed as investment recommendations. The charts & information provided here are not meant for investment purposes & only serve as technical examples.
Concurrently, nations of other major currencies will have to rejuvenate exports [devalue currency] in order to have better rate of USD to get better conversion rate back to their own currency. This will be true except for Japan because it does not care much for increased exports in order to devalue the YEN, something Japan is very good at doing; not being able to devalue the YEN. Japan seems to believe that other countries will still buy Japanese products regardless of price [at least to a limit where profit is optimized for the Japanese]. Japan’s economy today also seems more focused on minimizing business cost than trying to expand an already optimized export market. Stronger Yen means more purchasing power for the Japanese corporations and population.
Still, some leeway to the USD may be given; just enough to keep importers of Japanese goods continue purchasing. This is supported by the recent announcement by the Japanese Central Bank that the Japanese economy is expected to contract in the rest of 2009, more reason for the maintenance of Japanese exports to be a priority for Japan. Japan, like the US also has trillion dollar levels of Japanese bond debts, something that a contracting economy will struggle to repay.
Nonetheless, the last thing Japan needs now is inflation, resulting from an overly weakened YEN. The Japanese population must be kept happy with decent buying power. The population is critical to an efficient economy. Nobody likes to work when they buy much less things with the same pay. Thus Japanese inflation control will show. Therefore, expect efforts to slight weakening of Yen against USD to maintain Japanese exports while balancing inflation control.
Hypothesis scenario: Yen strength to bottom out after a month or two and its devaluing controlled to find stability against USD
Ideal chart outlook: Range-bound long term sideways within JPY territory for the final quarter of 2009
US require a sublime balance of inflation control and export rejuvenate to assist in optimal economic recovery – pleasing both its general population and corporations. There is suspect that EUR and GBP will move according to this US tune – a.k.a. won’t be using the USD as a punching bag as in the past, at least for the rest of 2009 and possibly until their own economy gets back on track. By looking at the global economy this way, it seems that the only way for USD to regain control as top global currency was to crash the US economy.
This conspiring move, to significant effect had weakened other main currencies and their economies. For medium term I will be looking for overbought EUR and GBP on daily charts for bear entries. The new bear opportunities will be the point when current weekly term bull will be closed due to failure of bull range to continue. It is imperative to find prudent bear weekly term opportunities for EUR and GBP markets to carry over into a major bear breakout in the final quarter of 2009. A Bullish bias for USDJPY toward the end of the year is forecasted.
Disclaimer: Trading in the FOREX market & other forms of investments involves risk. This information should not AT ALL be viewed as investment recommendations. The charts & information provided here are not meant for investment purposes & only serve as technical examples.
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