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Market View

A potential Setup for USDJPY

Thursday, May 30, 2019 3:52 PM GMT

A potentially rewarding bullish scenario could materialize for USDJPY as the pair could potentially cross north the trend-line that is currently defining the bearish momentum that started since late April.

USDJPY Daily Chart


 

USDJPY 4Hour Chart

The bullish scenario should be considered busted if the pair reaches the 108.88 level.

 Strengths of USDJPY – Weaknesses of JPY:

  • downward revision of expected Japanese GDP from OPEC.
  • The source of concern are the Japanese exports due to the moderate global growth. Indeed, the trade balance fell.
  • deteriorating macro readings: unemployment, current account, manufacturing PMI (crossed bellow 50), Services PMI, industrial production, machine tool orders, consumer confidence, PPI (prices sold to corporations)

 

Weaknesses of USDJPY- Strengths of JPY:

  • Trump's latest visit to Japan has not produced concrete news. The tariffs threat on Japanese autos remains.
  • Domestic demand is expected to pick up due to increased government spending and the current monetary policy. Yet, economy needs to overcome the upcoming consumption tax hike, scheduled to be imposed on October.
  • improving macro readings: GDP (yet, it is expected to decrease in 2019), inflation, retail sales, trade balance, M2, average cash earnings, capital spending, household spending, industries activity (but remains negative for 4th month in a row), housing starts, economy watchers sentiment, consumer sentiment, bank lending

 

Watch / New Releases:

  • Friday's releases for Japan: inflation, unemployment, industrial production, retail sales, housing starts
  • Friday's releases for USA : core PCE, the most watched inflation metric by the FED
  • next Monetary Meeting of the FED is on 19 June and next Monetary meeting of the Bank of Japan on 20 June.

 

Disclaimer

The views expressed do not constitute investment or any other advice/recommendation /suggestion and are subject to change. Reliance upon information in this material is at the sole discretion of the reader. Opinions expressed in the report do not represent the opinion of Zulutrade and do not constitute an offer or invitation to anyone to invest or trade.

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