JPY Analysis 22.08.2019

The US dollar fell during the Asian session after the developments and economic data followed by the Japanese economy, the third largest economy in the world and on the eve of developments and economic data expected on Thursday by the US economy, the largest economy in the world, which includes the launch of the economic policy seminar Jackson Hole in the Kansas City Reserve Bank FEMA for three days.

At 05:54 AM GMT, the USDJPY fell 0.18% to 106.43 levels from 106.62 opening levels, after hitting a session low of 106.40, and a high of 106.65.

We followed the preliminary reading of the Markit manufacturing PMI for Japan, the third largest industrial country in the world, which showed contraction shrank to 49.5 vs. 49.4 in July, before we saw the release of the overall manufacturing activity index which showed a decline. 0.8% vs. 0.5% in May, worse than expectations for a 0.7% decline.

On the other hand, we are looking forward to the US economy for the release of the claims applications, which may show a decline of 3 thousand applications to 217 thousand applications during the past week last Saturday, before we witness the release of the preliminary reading of the manufacturing and services PMI Markit for America, Expectations were for the manufacturing sector to widen to 50.5 from 50.4 and the services sector widened to 52.9 from 53.0 in July.

Leading indicators, which may show a rise of 0.2% versus a decline of 0.3% in June, coinciding with the launch of the Jackson Hole Symposium, which is attended by global central bankers and finance ministers as well as academics and financial market participants from all over the world. Tomorrow we will see Federal Reserve Governor Jerome Powell's speech on “Monetary Policy Challenges” during the seminar.

This comes hours after the release of the minutes of the Federal Open Market Committee meeting held on July 30-31, in which it was approved to cut interest rates on federal funds for the first time in more than a decade by 25 basis points to between 2.00% And 2.25%, which was in line with expectations, with the view that the reduction came to support the pace of growth and combat the weakness of inflation in the shadows of trade protectionism.

Technical Analysis

The USDJPY has tested 106.70 and held steady below it, to start providing negative trading now, keeping the bearish scenario intact over intraday and short term, supported by stochastic negativity.

Our awaited targets start at 105.05 and then 104.60, while stability below 106.70 is an important condition to achieve.

Expected trading range for today is between 105.70 support and 107.00 resistance.

Expected trend for today: Bearish.