Dare to Question Prior Market Expectations | The Direction of the Foreign Exchange Market from Here Onward, Episode 135 (Updated 2021.05.14)

In Japan's only FX specialty magazine, FX攻略.com, which ran a popular series for over 130 installments, "The Future Path of the Foreign Exchange Market," we continue to ask economist Tomotaro Tajima how he predicts the continually moving market will behave in the future.

Tomotaro Tajima Profile

Tajima Tomotaro. Economic analyst. President and CEO of Alfinauts. Born in Tokyo in 1964. After graduating from Keio University, he joined Mitsubishi UFJ Securities (now MUFG) and then shifted his career. He analyzes and studies a wide range from finance and economics in general to strategic corporate management, and even individual asset formation and fund management. He serves as a lecturer for lectures, seminars, and training hosted by private companies, financial institutions, newspapers, local governments, and various industrial and commercial associations, with an annual number of lectures around 150. He has contributed to many print media series and comments, such as Weekly Spa's "The Rules of Online Trading" and Examina's "Money Maestro Training Course," and has written columns on numerous websites about stocks and forex, earning high regard as a stock and FX strategist. He has also written for Nikkei Sangyo Shimbun's Home Economics section in the "Basic Knowledge of Modern Terms." He has made regular appearances on television (TV Asahi "Yaji-uma Plus," BS Asahi "Sunday Online") and radio (Mainichi Broadcasting "Saa-chi's Asa-ichi Radio"), and now serves as a regular commentator on Nippon Keizai Shimbun CNBC "Market Wrap" and Daiwa Securities Information TV "Economy Marche." His major DVDs include "Very Easy to Understand: Tajima Tomotaro's FX Introduction" and "Very Easy to Understand: Tajima Tomotaro's FX Practical Technical Analysis." His main books include "Wealth Reassessment Manual" (Paru Publishing), "FX Chart 'Profit Equation'" (Alchemix), "Why Can FX Make You Asset Rich?" (Tect) and many others. His latest publication is "How to Profit by Riding the Rising U.S. Economy" (Jiyu Kokumin-sha).

I want the courage to doubly question market forecasts from the start!

Looking back a bit, the USD/JPY moved in a noticeably simple pattern: it dipped about 1 yen after the April U.S. employment report released on the 7th of this month, then retraced about 1 yen after the April CPI release on the 12th. Therefore, there are likely many investors besides the author who managed to achieve corresponding results by placing bets before the U.S. employment data release or before the U.S. CPI release.

If you think about it, both the U.S. employment report and the U.S. CPI were widely off from market expectations. Regarding the employment data, it had long been pointed out that the results might be modest due to seasonal adjustments and unusually generous unemployment benefits. As for the CPI, it was originally expected to be very strong. Especially for year-over-year data, a substantial base effect had been anticipated, so there was no surprise in the outcome.

What is important here is——