FX News - May 21 2014: USD/JPY Continues Slide on BoJ Interest Rate Decision

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The USD/JPY pair spiked briefly prior to the announcement of the Bank of Japan’s (BoJ) interest rate decision, which temporarily halted its downward slide that began yesterday. As expected, the BoJ decided maintain rates 0.1 per cent, and increased its monetary base at ¥60-70 trillion annually. Because of that, the USD/JPY continued sliding further after the announcement. It opened today at a modest 101.27, before peaking at 101.39. It is currently trading at 101.16, with initial resistance seen at 101.47, followed by 101.72. Meanwhile, initial support is at 101.05, followed by 100.79.

In Australia, Westpac released its Consumer Confidence and Consumer Confidence Index data for May, both of which were significantly lower than the previous month’s figures. Consumer Confidence fell by 6.8 per cent, which was lower than the previous rise by 0.3 per cent. This translated to a significant drop in the Consumer Confidence Index, as it came out at 92.9, lower than the previous 99.7. This brought the Index to its lowest level since August 2011.

The drop in Consumer Confidence is mainly blamed on Australia’s 2014 budget, which introduced steep cuts that are seen to severely impact average consumers. In the survey, 3.1 per cent of the 1,200 respondents said that they expect that the budget would help improve their family’s finances, down from last year’s 5.6 per cent. Those who said that it would worsen their finances were 59.2 per cent of the respondents, which was higher than last year’s 45.6 per cent.

The AUD/USD pair opened today at 0.9232, before dropping sharply to 0.9216 as soon as the Consumer Confidence data was released. It is making a slight recovery at the moment, and is currently trading at 0.9231. Initial resistance for the pair is at 0.9290, followed by 0.9313. Meanwhile, initial support is at 0.9193, followed by 0.9170.

By FX Strategy Team, Published on 21st of May 2014
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