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USD/JPY Outlook – November 15-19

Preliminary GDP, GDP deflator and Tertiary Industry Activity are the main events for the USD/JPY pair this week. Here is an outlook on the market movers awaiting us and an updated technical analysis of USD/JPY.

USD/JPY daily chart with support and resistance lines marked. Click to enlarge:

usd jpy November 15-19

Following the APEC meetings last week Japanese Prime Minister Naoto Kan said APEC, “will move forward to make the Free Trade Area of the Asia-Pacific a reality.” Still, divisions among the member countries persisted and results were vague and lacking substance. Kan, who favors joining the TPP talks, faces resistance from his own party amid a backlash from Japan’s farmers who benefit from tariff protection. Could this initiative bring a stop to protectionist trade actions? Time will tell.

Let’s start:

  1. Prelim GDP: Sunday 23:50. Japan’s economy expanded more than initially thought in the second quarter with a revised reading of 0.4% from a preliminary 0.1% in the second quarter. However Japanese economy is sill under threat from the yen’s advance to a 15- year high against the dollar and slowing export growth. In order to protect Japan from the yen’s advance, the Bank of Japan released a credit program and a fresh stimulus to help domestic demand. A climb of 0.6% is predicted now. The Preliminary GDP Price Index or GDP Deflator fell 1.7 percent from a year earlier, the fifth straight drop indicating the continuation of deflation trend in the Japanese economy. A smaller drop of 1.5% is expected now.
  2. Revised Industrial Production: Monday, 4:30. Revised Industrial Production declined -1.9% compared with a pervious -0.5%. The same decline is expected now.
  3. Tertiary Industry Activity: Monday, 23:50. This index measuring tertiary industry activity in Japan dropped a seasonally adjusted 0.2 percent in August compared to 1.6 percent gain in July. Expectations forecasted a 0.5 percent monthly decline. Industries that contributed to the decrease included miscellaneous services, scientific research, professional and technical services and information and communications. A larger decrease of 0.4% is anticipated.
  4. All Industries Activity: Friday, 4:30. All industry activity dipped 0.4% in August, in line with predictions following a 1.1% rise in July. Construction and government services showed growth in activity from the previous month. On an annual basis, all industry activity improved 3.7% in August compared to 3.2% in July. A further drop of 0.6% is expected.

* All times GMT

USD/JPY Technical Analysis

From the near all-time lows, USD/JPY jumped at the beginning of the week, crossing the 82 line (mentioned last week) and traded between 82 to 82.87 throughout the week, closing at 82.50.

Looking up, 82.87 was the line were the BOJ intervened to push the pair higher and it now serves as strong resistance. 84.11 is the next significant line, providing temporary support for the pair on its way down.

85.93 was a stubborn peak that USD/JPY reached after the intervention and s another strong line of resistance. 86.35 was a support line in July and later switched to resistance. It’s closely followed by 86.88, that worked as support earlier.

88.10, which was a support line in March and later worked as resistance. The last line for now is 89.15 which capped the pair before it fell lower.

Looking down, the 82 line which provided strong support now and worked as resistance beforehand is a strong line of support. Below, the 80.40 line, which was the lowest close ever, is another strong support line before the ultimate all-time intra-day low of 79.75 reached in 1995.

I remain bullish on USD/JPY.

Dollar/Yen bottomed out and is now recovering, even without an intervention by the BOJ. The weakness of the Japanese economy is likely to be confirmed now, pushing the pair higher.

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Anat Dror

Anat Dror

Anat Dror Senior Writer I conceptualize, design and create multi-lingual websites. Apart from the technical work, my projects usually consist of writing content for these sites in English, French and Hebrew. In the past, I have built, managed and marketed an e-learning center for language studies, including moderating a live community of students. I've also worked as a community organizer