Japanese yen analysis 01-07-2020

The US dollar fell during the Asian session to witness its rebound from above since June 9 against the Japanese yen after the developments and economic data that it followed on the Japanese economy and on the cusp of developments and economic data expected today by the US economy, which includes the disclosure of the minutes of the Federal Market Committee meeting The open and following Fed testimony Jerome Powell before Congress.

At exactly 05:53 AM GMT, the US dollar pair rose against the Japanese yen by 0.17% to 107.76 levels compared to the opening levels at 107.58 after the pair achieved its highest level during the trading session at 107.79, while achieving the lowest at 107.54.

We followed about the Japanese economy, the second largest economy in Asia, the third largest economy, and the third largest industrialized country globally. The release of the first reading of industrial production, which showed a decline in retreat to 8.4% compared to 9.8% last April, is worse than expectations that indicated a decline in the decline to 5.6%, while The annual reading of the same index showed that the decline widened to 25.9% compared to 15.0% in April, also worse than expectations, which indicated a decline of 11.3%.

This came in conjunction with the release of the unemployment rate reading, which showed an increase to 2.9% compared to 2.6% in April, worse than expectations that indicated an increase to 2.8%, to the disclosure of housing market data with the release of the annual reading of the index of start-up that showed a contraction The decline fell to 12.3% compared to 12.9% in April, contrary to expectations that the decline will extend to 15.0%.

On the other hand, investors are currently watching by the US economy to disclose preliminary data for the labor market with the release of the index of change in private sector jobs, which may reflect about 2,850 thousand added jobs compared to the loss of 2,760 thousand jobs in May, and this comes hours before the disclosure After tomorrow, Friday, the monthly report for jobs except agricultural and unemployment rates in addition to the hourly rate for the month of June.

This comes before we witness the disclosure of the final reading of the manufacturing PMI by Markit for the United States, which may reflect the stability of the contraction at a value of 49.6, little changed from the initial reading for the past month and against a contraction at 39.8 in May, before we witness the release of The construction spending index, which shows a 1.0% increase compared to a 2.9% decline in April.

Up to the disclosure by the largest industrial country in the world of the reading of the Institute of Industrial Supply index, which may show contraction shrinkage to 49.5 compared to 43.1 in May, as the reading of the Institute of Industrial Supply measured in prices may indicate shrinkage of deflation to 43.8 compared to 40.8 , And we would like to point out, because the reading reading at a value of 50 or higher reflects an amplitude, while its reading under 50 indicates a contraction.

This comes before the Federal Reserve revealed the minutes of the Federal Open Market Committee meeting that took place on 9-10 June, through which it decided to fix interest on federal funds at zero levels between zero and 0.25%, which came in line with expectations at the time. And, with the disclosure also at the time of the expectations of the members of the Committee of the rates of growth, inflation and unemployment in addition to the future interest rates for the next three years.

We would like to point out, because the expectations of the members of the Federal Committee included at that time that short-term benchmark interest rates will remain at their zero levels until 2022 and that the American economy may shrink 6.5% during 2020 and that unemployment rates may reach 9.3% by the end of this year 2020, before It declined to 6.5% in 2021 and to 5.5% in 2022.

We have followed about the Japanese economy, the third largest economy in the world and the third largest industrialized country globally. The reading of the Tankan Industrial Index read, which showed the worst performance of the index since the second quarter of 2009, with the contraction widening to 34 compared to 8 in the first quarter last, worse than the expectations that indicated the expansion of deflation. To 31, while the Tankan Service Index reading shrank 17 versus the breadth of 8 in the first quarter, beating the forecasts that indicated a contraction of 20.

This comes before the Federal Reserve revealed the minutes of the Federal Open Market Committee meeting that took place on 9-10 June, through which it decided to fix interest on federal funds at zero levels between zero and 0.25%, which came in line with expectations at the time. And, with the disclosure also at the time of the expectations of the members of the Committee of the rates of growth, inflation and unemployment in addition to the future interest rates for the next three years.

In another context, yesterday we followed the testimony of the Federal Reserve Governor Powell and the US Treasury Secretary Stephen Manuchin before the House Financial Services Committee, through which Powell stated that controlling the Corona virus is vital to the recovery of his country's economy and that a new stimulus is being adopted during July. He added that the Federal Committee intends to provide more information about the lending program and extend it by the end of this week.

This was with Powell touched on Tuesday that the Federal Reserve has concerns about China's commitment to the partial trade agreement reached by Washington with Beijing earlier this year, while expressing that it may abide by it, explaining that the United States lost its confidence in China because of the lack of transparency about the Corona virus, and came This is with Treasury Secretary Manuchin also emphasizing before Congress to work to expand stimulus during July.

It is noteworthy that the US Congress has allocated $ 3 trillion so far as financial stimulus that included direct financial distributions for families and plans to exempt from small business loans, while the Federal Reserve has implemented cash stimulus programs exceeding $ 1 trillion to support the credit market for families and companies, the last of which was the launch of the Federal Reserve last week for a program that provides a package Loans worth $ 600 billion for businesses that employ around 15,000 people or whose returns exceed $ 5 billion.

Technical analysis

The dollar versus yen made a strong breach of the level of 107.68 and closed the daily candle above it, to activate the bullish trend scenario over the intraday basis, on its way to head towards 109.22 areas mainly.

Therefore, the bullish bias will be expected during the upcoming sessions, noting that the price starts today with a noticeable negativity to test the aforementioned support, as the price needs to hold above this level to keep the positive scenario effective.

The expected trading range for today is between 107.00 support and 108.50 resistance

Expected trend for today: bullish