USD/JPY – Technical Analysis for Forex Trading & CFDs.
Japan – Household Spending
Today, at GMT 11:30 p.m., the Japanese Statistics Bureau will release the year over year Household Spending figure, which measures the inflation adjusted value of all expenses by the Japanese consumers.
Forex investors consider the household consumer spending to be a leading indicator of a country’s economic health. This is because the amounts spent by consumers have a ripple effect on the overall economic activity in the country.
Last month, the year over year Japanese Household Spending figure decreased by 2.3% and the forecast for this month is currently set at an additional increase of 0.8%.
United States – Institute for Supply Management (ISM) Manufacturing PMI
On Friday, at GMT 2:00 p.m., the Institute for Supply Management will release its manufacturing PMI figure for the United States. The ISM’s US manufacturing PMI measures the level of a diffusion index based on a survey of 400 purchasing managers.
Purchasing managers in the United States are involved in the supply side of the economy. As most companies reduce their expenses and production based on their sales forecast, the survey of purchasing managers reveals the overall optimism of various companies in the country. Hence, Forex traders can easily figure out the sentiment regarding the economic condition in the country from the ISM manufacturing PMI readings.
Last month, the ISM manufacturing PMI for the United States came out at 56.3 and the forecast for this month is set at 56.5.
Since the start of 2017, the USD/JPY price action mostly remained range bound between 108.85 and 114.30. Over the last few weeks, the USD/JPY turned bearish after forming a bearish outside bar on July 11, but once again found strong support near the 108.85 level. Although the pair penetrated below the 108.85 level several times in the last couple of weeks, it failed to close below this support level.
As the US ISM Manufacturing PMI reading is estimated to have a minor increase to 56.5, but the Japanese household spending is set to increase by an additional 0.8%, we believe it would set a bearish fundamental outlook for the USD/JPY this week. Therefore, if the USD/JPY closes below the 108.85 level, it would likely attract additional bearish momentum in the market.
Hence, Australian Forex traders should look out for trading opportunities below this major support level around 108.85.