- The bulls remain in control and the DXY is en route for fresh YTD highs.
- USD/JPY is trading in a narrow range at the descending resistance line, supported by a cluster of daily MAs, notably the 200-D SMA at 110.18.
- The US data calendar is well worth watching.
USD/JPY is trading in a narrow range at the descending resistance line, supported by a cluster of daily MAs, notably the 200-D SMA at 110.18 and is riding the improved risk sentiment in overnight trade on Wall Street.
Wall Street records modest gains on Thursday
US stocks we trading in stark contrast to European markets that were hung up on trade war angst and fears of a global recession as d-day for US tariffs on Chinese imports lurks just around the corner.
However, on July 6th, U.S. tariffs on $34bln worth of Chinese exports are set to kick in, potentially sparking off a retaliation from Bejing that would likely set off a flight to safety supporting the yen. Meanwhile, the bulls remain in control and the DXY is en route for fresh YTD highs. The yield spread remains key and the US 10yr treasury yield climbed overnight from the daily lows of 2.82% to 2.85%.
As for data, US numbers underperformed in jobless claims and Q1 US GDP was revised lower to 2.0%, from 2.2%.
“The revision primarily reflected less consumer spending on services and private inventory investment. Revised data also showed more non-residential fixed investment. Consumer spending on services was lower due to less healthcare spending by non-profits. Jobless claims rose to 227k the highest reading in five weeks. However, the increase is well within the usual range of variation and it’s very unlikely to mark the start of a sustained increase,”
Analysts at ANZ explained.
From Japan today: Japan Tokyo CPI jumps to 0.7%
As for the rest of the week, analysts at Westpac explained the US data calendar is well worth watching. “May personal income and spending data includes the Fed’s preferred inflation measure, the personal consumption expenditure (PCE) deflator. This is expected to have risen 2.2%yr overall, boosted by gasoline prices and 1.9%yr on the core measure. The June Chicago manufacturing survey is also due. It typically runs above other regional surveys – consensus is 60.”
USD/JPY levels
Valeria Bednarik, chief analyst at FXStreet explained that the pair is close to the mentioned weekly high, pressuring a resistance area:
“The 4 hours chart presents a neutral-to-positive stance, although the buying interest seems to have somehow decreased, as it has stabilized above a key Fibonacci level and its 100 and 200 SMA, while technical indicators have lost directional strength, now stable within positive readings.”
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