USDJPY analysis 16.01.2020

The US dollar fluctuated in a narrow range tilted to the upside during the Asian session, to witness its rebound to the fifth session in seven sessions from the lowest since October 10 against the Japanese yen after the developments and economic data that it had reported on the Japanese economy and on the eve of developments and economic data expected today By the US economy and following the signing of US President Donald Trump and Chinese Vice Premier Liu He on the first stage of the trade deal in the White House.

At exactly 05:52 am GMT, the US dollar pair rose against the Japanese yen by 0.04% to 109.94 levels compared to the opening levels at 109.90, after achieving its highest level during the trading session at 109.99, while achieving the lowest at 109.86.

On the Japanese economy, we followed the disclosure of inflation data with the release of the producer price index, which is an initial indicator of inflationary pressures, which showed a slowdown in the pace of growth to 0.1%, in line with expectations, compared to 0.2% last November, while the annual reading of the same indicator showed an acceleration The pace of growth to 0.9% is in line with expectations, compared to 0.1% in the previous annual reading for November.

This came in conjunction with the disclosure also by the third largest economy in the world and the third largest industrialized country after both the United States and China, from a reading of the machinery orders index, which showed an increase of 18.0% compared to a decline of 6.0% last October, outperforming expectations that indicated a rise 2.9%, as the annual reading of the same index showed an increase of 18.0% against a decline of 6.1% in October, contrary to expectations that the decline decreased to 5.4%.

On the other hand, investors are currently watching the US economy by revealing the retail sales reading that represents about half of consumer spending, which represents more than two-thirds of the gross domestic product of the United States, which may reflect the acceleration of growth to 0.3% compared to 0.2% in November. A substantial reading of the same indicator may show that growth accelerated to 0.5% versus 0.1% in November.

This comes in conjunction with the disclosure of the Philadelphia Industrial Index reading by the largest economy in the world and the largest industrialized country globally, which may reflect a widening of what amounted to 3.7 compared to 0.3 last December, and with the release of the import price index, which may explain the acceleration of growth to 0.3 % Compared to 0.3% in November, while the annual reading of the same index may show a 0.5% increase compared to a decline of 1.3% in the previous annual reading for the month of November.

This also comes in conjunction with the issuance of the aid claims index for the week that elapses on January 11th of this year, which may reflect an increase of 3 thousand requests to 220 thousand requests compared to 214 thousand requests in the previous weekly reading, in conjunction with the disclosure of the inventory reading Businesses, which may reflect a 0.1% decline compared to a 0.1% growth in October.

Up to the disclosure of the US housing market data with the release of the housing index reading by the National Association of Home Builders, which may reflect a decline to $ 74 compared to 76 in December, in conjunction with the speech of a member of the Federal Open Market Committee and Deputy Governor of the Federal Reserve Michael Bowman on the housing projections at the Kansas City Home Building Association at Breakfast Economic Outlook.

Other than that, both President Trump and the Chinese Vice-Premier hailed the cooperation between the two countries and the flexibility in the negotiations that contributed to ending the virtue of the trade dispute between them which lasted for about a year and a half, and the American President expressed the fact that Beijing is helping Washington in resolving a number of issues It is reported that the two parties will complete negotiations regarding the second stage of the trade agreement, which may be reached after the upcoming major US elections.

In the same context, US Treasury Secretary Stephen Mnuchen yesterday expressed that the second stage of the trade agreement will witness the abolition of more tariffs, while stating that the first stage of the trade agreement has a comprehensive and enforceable mechanism and that China has agreed to develop laws to fulfill its obligations, adding that Some outstanding issues, including technology and cybersecurity, will be worked on in the second phase of the trade agreement.

Mnuchin also noted that the Huawei crisis is not an obstacle with regard to relations between the United States and China, and this came hours after the report that touched on the fact that the American administration is drafting rules to prevent more Huawei Chinese sales, which highlighted the continuing tensions between Washington and Beijing in particular. That the US tariffs on Chinese goods at about $ 360 billion still remain after the main elections that until the completion of the second phase of the agreement.

Technical analysis

The dollar versus the yen fluctuated in a narrow path since yesterday, and we notice that the stochastic starts providing positive signals on the four hour time frame, which supports expectations for the continuation of the bullish intraday direction, mainly awaiting the visit of the 110.50 level.

In general, we will continue to favor the bullish trend during the upcoming sessions provided that the price maintains its stability above 109.33.

The expected trading range for today is between 109.33 support and 110.70 resistance.

Expected trend for today: bullish.