gbpjpy Neutral

Watching carefull with up and coming Data

GBP/JPY's choppy fall from 131.79 is still in progress for 127.10 support. Break will confirm resumption of whole fall from 133.48 and should target 61.8% retracement of 117.29 to 133.48 at 123.47. Though, above 129.57 minor resistance will flip bias back to the upside for a test on 133.48 instead.
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Hrly Resistance ML Poseidon

THE NEXT DAY  We make 791pips

Target 1 Accomplished

As we approach that Bank of Japan interest-rate decision market participants are eagerly anticipating to see whether thecentral bank will undertake further monetary easing by adding to its bond purchase program.
In Thursday’s session we saw some Japanese yen shorts closed or pared down as various rumors swirled around including one where the Bank of Japan was said to not be considering spending its bond purchase program. But, we should look to the view that Reuters reported earlier in the week that we will in fact have a move by the BOJ.

From Reuters: “The Bank of Japan is likely to ease monetary policy on Friday by boosting asset purchases by up to 10 trillion yen ($123 billion) and in doing so may extend the maturity of government bonds it targets to around three years, according to sources familiar with the central bank’s thinking.”

Therefore, the market is going into the meeting expecting the BOJ to add at least ¥5 trillion more to its asset purchase program. Such a move should weigh on the JPY, especially if it’s congruent with general risk appetite – which we saw in the New York trading session.
If the BOJ decides to undertake ¥10 trillion more in bond purchases, that should spark a sell-off in the yen, which would please the central bank as part of its attempt here is to devalue the currency.
Inaction by the BOJ seems remote:

From Bloomberg: “Inaction “would be a disaster for communication,” Atsushi Mizuno, who served on the Bank of Japan board from 2004 to 2009, said in an interview yesterday in Tokyo. All 14 economists surveyed by Bloomberg News before tomorrow’s gathering predict Governor Masaaki Shirakawa and his colleagues will boost asset purchases amid forecasts for growth to slow through the year.”

Taking Advantage of An Announcement of BOJ Easing – GBP/JPY and CAD/JPY

The best candidates to take advantage of any easing announcement would be the Pound and Canadian dollar which have been stronger against the yen over the last 2 weeks, as these respective currencies central banks’ have taken on a morehawkish posture of late.

The GBP/JPY, seen above has been trading in a sideways range over the last five trading sessions after pushing higher after the BOE Minutes 2 weeks ago. A fundamental catalyst such as the BOJ easing should push the pair above its recentresistance around 131.70 and likely target the highs we had seen in late March at 133.50 – a move of around 180 pips.