JPY Analysis 15.08.2019

The US dollar fluctuated in a narrow range, tilted lower during the Asian session, completing corrections after it rose more than one percent last Tuesday, showing its best daily performance since March 28, 2018 against the Japanese yen following the developments and economic data that followed from the economy. The Japanese economy is on the cusp of the economic developments and data expected on Thursday by the US economy.

At 05:50 am GMT, the USDJPY fell 0.01% to 105.90 levels from 105.91 opening levels, after hitting a session low of 105.73 and a high of 106.03.

The Japanese economy, the third largest industrial nation in the world, followed the release of the industrial sector data with the release of the final industrial production which showed that the decline decreased to 3.3% compared to the initial reading for the month of June and expectations of 3.6%, against a rise of 2.0% in May. Last year, as the annual reading of the same index showed the decline shrank to 3.8% from 4.1% in the previous annual initial reading.

On the other hand, investors are now awaiting the US economy to reveal the retail sales figure, which accounts for about half of consumer spending, which accounts for more than two-thirds of US GDP, which may reflect a slowdown in growth to 0.3% vs. 0.4% last June. A core reading of the index could show growth stabilizing at 0.4%, little changed from June.

This comes in conjunction with the release of the preliminary reading of the single labor cost index, which reflects a rise of 1.7% versus a decline of 1.6% in the first quarter, while the preliminary reading of the productivity of non-agricultural sectors may show slower growth to 1.4% compared to 3.4% in the first quarter, in conjunction with The release of the Claims Index which may show an increase of 3 thousand applications to 212 thousand applications during the week elapsed last Saturday.

Markets from the world's largest industrialized countries are also looking to reveal the Philadelphia Industrial Index, which may reflect a contraction of 10.1 vs. 21.8 in July, and the release of the New York Industrial Index, which may also show a contraction of 2.1 vs. 4.3 v. July, ahead of the release of the Industrial Production which may show a 0.1% growth versus the zero level in June.

In the same context, the energy utilization rate reading may show growth slowed to 77.8% vs. 77.9% in June, before the housing market data was released with the housing index released by the National Association of Home Builders which may reflect an upward trend. It stood at 66 vs. 65 in July, coinciding with the release of wholesale inventories which may show slowing growth to 0.1% vs. 0.3% in May.

The reversal of the yield curve on US bonds for the first time since 2007 and the contraction of the German economy, the largest economy of the euro area 0.1% in the second quarter, in addition to the National Bureau of Statistics of China for the annual reading of industrial production, which showed the lowest pace of growth since 2002 during Last July yesterday.

The Japanese yen, which investors use as a safe-haven in corrections to losses last Tuesday following the US Treasury's announcement to postpone the imposition of tariffs on US imports of some Chinese commodities, was allowed until December 15, renewing hopes for a breakthrough. Trade disputes between Washington and Beijing.

Technical Analysis

The USDJPY traded markedly negative yesterday after testing the 106.70 level, resuming the bearish main course, on its way to visit the recent low of 105.05 as the first stop.

Therefore, we hold onto our expectations for a bearish trend that requires stability below 106.70, noting that the next major target is 104.60.

Expected trading range for today is between 105.00 support and 106.60 resistance.

Expected trend for today: Bearish.