Approaching End of Best Period For JPY

The coming week hold few important events, at least on the American side. The very few relevant data will be represented by sales of existing homes on August 21st, prices of houses is the leading indicator on August 22nd, and sales of new homes on August 23rd. But, the event that analysts will look at more closely is the publication of the minutes for the last FOMC of the Fed, scheduled for publication on August 21st. From those signs, the market may interpret the next steps that the Fed intends to put in practice and when the tapering could begin.

GERMANY TOWARDS ELECTIONS

Obviously the German elections will be the main event scheduled at European level in the month of September, but in the meantime it will be interesting to understand how the German economy will handle this event. One fact emerges above all and is represented by the PMI services and manufacturing indicator that is due on August 22nd, followed by the revised data of the GDP in the second quarter.

OTHER DATA

In a poor week of data for all, it is foreseeable that the limited outgoing data will not create a lot of volatility on the market. However, we can still quote the Japanese Trade Balance on August 19th, the minutes of the last RBA meeting on August 20th, the decision on interest rates by Turkey still on August 20th, South African inflation on August 21st, as well as retail sales and inflation of Canada on August 22nd and 23rd. But very little else.So, this is why we will focus on the approaching end of one of the best seasonal period for the JPY. USD/JPY has fully complied with the seasonal directions and area 96 is provides clear evidence. At this point, due to the importance of the support, a long USD/JPY is worth trying.




TRADE OF THE WEEK

The Indian rupee has dramatically fallen in recent months with an evident acceleration started in May when the USD/INR ratio found three times a strong support in the moving average reference before taking off upwards. By creating regression channels related to the bull market started in 2008 and the most recent one of 2011, it is clear that we are very close to the upper end of the channel. Area 63 that is, in our opinion, should contain the bull market by taking the quotes back on the previous top of 57 in 2012. For this reason, we would enter short of USD/INR also trusting that the two-months period from September to October is one of the best for the rupee.