After two losing weeks, Dollar/yen rebounded and gained close to 1%. In Japan, the highlight of the upcoming week is GDP for the second quarter, which is projected to slide by 8.1%.
USD/JPY fundamental mover
Japan Industrial Production was stronger than expected, with a strong gain of 8.0%. This easily beat the estimate of 5.0%. Retail sales posted a fifth consecutive decline, falling by 2.8%. The Manufacturing PMI was revised to 47.2, up from 46.6 points. Still, this points to contraction.
In the US, last week’s numbers were positive. Manufacturing PMI improved to 56.0, up from 54.2 points. The Services PMI also pointed to expansion, but slowed to 56.9, down from 58.1 beforehand. Unemployment claims dropped below the 1-million mark with a reading of 886 thousand.
Nonfarm payrolls slowed to 1.371 million, but were very close to the estimate of 1.374 million. The unemployment rate fell sharply to 8.4%, down from 10.2%. This marked the first single-digit reading since April, prior to the COVID-19 pandemic. There was more good news from wage growth, which rose from 02% to 0.4%.
USD/JPY Daily Chart
USD/JPY Technical Analysis
- 108.88 has provided resistance since early June.
- 107.97 is protecting the 108 line.
- 107.18 (mentioned last week) is next.
- 106.44 is an immediate resistance line.
- 105.45 has switched to a support role after strong gains by USD/JPY last week.
- 104.50 has some breathing room in support.
- 103.52 is the final support line for now.
I am bullish on USD/JPY
The US dollar flexed some muscle last week as the US economy is showing signs of recovery. With the Japanese economy struggling, the US dollar rally could continue.
Comments
Log in or sign up to join the conversation.