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New approach of BoJ towards forex market interventions is described. Unintended consequences of new policy implementation are discussed. Alternative methods of lowering inflation at disposal of BoJ are considered; possible outcomes for different scenarios are outlined and their impact on JPY exchange rate is put forward.

For years now central bankers around the globe are trying to convince public that inflation is indispensable constituent of healthy economic growth and should be greeted with optimism as harbinger of coming prosperity. There is one caveat though they say, it should be rightly dosed at 2% annual rate; any readings below the desired level is deemed as counterproductive.
Considering relatively low levels of inflation in Japan over the last decades, at least according to government statistics, the aim of reaching “the target level” seems to be hard to achieve.
Considering that over the last decade inflation in Japan, at least according to government statistics, stayed at relatively low levels, the aim of reaching “the target value” might seem to be very hard to achieve.
Indeed, it is rather difficultto overcome deflationary forces in highly indebted econom…
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HelgaPehkel avatar

i just have closed buy order on USD/JPY on 104.13

speculo_ergo_sum avatar

thank you for reading my article:) I do appreciate any feedback, opinions, words of relentless criticism:)))))))))) well, I do think that JPY might go up, provided BoJ does right things. Speaking of short term trends, I hope that this week USDJPY will go down to at least 102.

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Is the application of micro and macro economic theory in markets in order to predict future trends. The main fundamental forces drive the currency markets._____________________________________________________________________________Trade Balance (Balance of Trade in Goods):The Trade Balance is an indicator of the difference between exports and imports of goods from one country. A positive trade balance or a surplus occurs when a country's exports exceed imports. A negative balance of trade, or a deficit, occurs when more goods are imported than exported.The Trade Balance and any changes in exports and imports are closely followed by foreign exchange markets, as it is an important indicator of foreign exchange trends. Measurements of imports and exports are important economic indicators of global economic activity. Trends in export activity not only reflect the competitive position of the country in question, but also the strength of economic activity abroad. Trends in import activity reflect the strength of national economic activity. A country with a significant deficit of the trade balance will normally have a weaker currency because there will be a continuous commercial sale of …
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dada123 avatar
dada123 27 June

Excellent material :-)

Faster avatar
Faster 28 June


Pisakjanos avatar
Pisakjanos 28 June

Good work. Just keep it this way.

Decebal avatar
Decebal 30 June

good work!

WallStreetBlog avatar

Thank you very much!!!

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Introduction:The unmissable Bank of Japan (BoJ) meeting on Thursday the 4th of April has put in place a huge "shock and awe" level of QE, they have promised to purchase Japanese Government Bonds (JGB), ETF's and REIT's in order to increase the monetary base and help raise inflation.A breakdown of what the BoJ is actually doing is listed below;BoJ to buy 7 Trillion Yen of JGB's per month, all maturities up to 40 year bonds. Thus extending the average maturity to 7 years from 3 currently.BoJ to purchase "low risk" ETF's at a pace of 1 Trillion yen per year and REIT's at 30 Billion yen per year.2 year time zone to achieve 2% CPI Y/Y target.The overall aim of these measures is to double the monetary base, and hopefully, they believe, because of this they will start to see inflation. The current CPI Y/Y currently stands at 0.7% and has been almost stagnant for the past 18-20 years.Japan CPI Y/Y. Thomson ReutersAs you can see, they are aiming to target 2% (the yellow line) in a relatively short time frame, even though there is a 2 year target, if there is no improvement in the next 6-9 months there will be politcal pressure mounting._______________________________________________________…
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alifari avatar
alifari 28 Apr.

Excellent Article +1

valentine avatar
valentine 29 Apr.

Finally i get the chance to read a truly in-detail article, not only crap "hmm x is going down, its good to sell". More articles like this please! Thanks!

AdrianWS avatar
AdrianWS 29 Apr.

cheers for the positive feedback guys :) not sure if I'll write these detailed articles much more, dukascopy don't seem to like them and they require a lot of effort, they seem to prefer trading strategies or coding, so depending on how this does I might write an article on potential housing bubble in singapore / new zealand as per request from a webinar but we'll see!

Thanks anyway.

xau avatar
xau 30 Apr.

Very professional i may say, hope to be at this level some day. All strategies dies at some point, but such analysis is everlasting. Thanks for your effort.

valentine avatar
valentine 30 Apr.

This article has to get in top 3, after dukascopy rating! I hope at last their rating will sort the actual quality of articles posted this month.

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The Office for National Statistics produces two main measures of consumer price
inflation: the Consumer Prices Index (CPI) and the Retail Prices Index (RPI).
The RPI was introduced in 1947 and was made
official in 1956. The CPI was introduced in 1996 as the Harmonized Index of
Consumer Prices (HICP).
In May 1997, the new government handed control
over interest rates to the politically-independent Bank of England Monetary Policy Committee (MPC). In few
words, the committee is given the responsibility of adjusting interest rates in
order to meet the inflation target set by the Chancellor. (related article here)
In December 2003 the National Statistician
decided that the UK version of the HICP would be renamed the Consumer Prices Index (CPI) and the UK
inflation target would in future be based on the HICP, replacing the Retail Prices Index excluding mortgage
interest payments (RPIX).
The difference between the RPI(X) and the CPI
is a bit complex and out of the topic
of this article, where I will consider the CPI as the most important data,
since it is the BOE’s inflation target and also for length purposes.
Actually the CPI tracks th…
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scramble avatar
scramble 10 July

@jose: yes that's what i'm doing! since i have a huge lack in fundamental study, i will go deep and deep in all main aspects, showing main things after i understood them. this will certainly improve my perception in markets. prize or not ;-)

AdrianWS avatar
AdrianWS 11 July

Very nice article once again, keep up the great work :)

Ficlubi avatar
Ficlubi 18 July

Nice work! It helps me to understand a bit more the factor behind GBP. It will definitely helps my trading in gbp/jpy which so far need more improvement.

shaukat113 avatar
shaukat113 20 July

yet another good article from a trader how know the art of trading

projectx44 avatar

Great article!Forex Community is looking forward to reading your next article about trading...

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