Forex Technical indicators 18.06.2007
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Moving Average:
Crossing of two moving averages and closing price of the candle is above the short term moving averages
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RSI
RSI in an uptrend with break of 70% line
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MACD
MACD crosses two lines and pointing upwards with high volume
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Bollinger
Bollinger gives us a bullish signal after closing the candle above the upper band
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Bollinger Band and RSI
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Fundamentals:
No surprises from BoJ
As expected, Bank of Japan (BoJ) kept the overnight lending rate unchanged at 0.5%. The decision was unanimous. Furthermore, it kept its assessment of the Japanese economy unchanged as “expanding moderately “ and it still expects inflation to stay around zero in the short run but trend upwards in the medium term. Our interpretation is that slightly negative inflation will not prevent BoJ from hiking rates in its process of normalisation of monetary policy as long as it still believes the economy is expanding.
At the press briefing, BoJ governor Fukui said that he needed to be more confident about sustainability of both private consumption and capital expenditure. This probably means that BoJ will have to gather more economic evidence before it makes a decision to hike rates. In our opinion, the Tankan and the Q2 GDP reports will be decisive. On the other hand, Fukui left the impression that a weaker JPY and the recent rise in bond yields will not significantly influence the interest rate decision.
We expect BoJ to hike the overnight lending rate by 25bp at its monetary meeting on August 23 after the Upper House election in July and the release of Tankan and Q2 GDP. Only some very negative surprises on Tankan and GDP figures would make BoJ postpone a rate hike. This is most likely the last hike from BoJ this year. We believe that BoJ will increase the pace of monetary tightening in 2008 with two interest hikes in H1 08 (the first probably in early Q1 08).
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Moving Average and MACD
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