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Japan’s economy grew an annualized 2.2% in Q1, revised upwards from the initial reading of 2.1%. At the same time, consumer spending remains weak, as wage growth has been softer than anticipated.
In the U.S., May inflation numbers were soft, as CPI and core CPI came in at 0.1%. As expected, U.S. consumer spending data improved sharply in May. Core retail sales climbed 0.5%, matching the estimate. Retail sales also improved to 0.5%, but fell shy of the forecast of 0.7%. These consumer inflation and consumer spending numbers could play a crucial role in the Federal Reserve’s forward guidance for rates. The markets are prepared for rate cuts in the second half of the year. The CME Group has set the odds of a July cut at 62% and another cut in September at 55%.
See all the main events in the Forex Weekly Outlook
Updates:
112.73 was an important resistance line in October.
112.25 has held in resistance since December.
111.69 was the high point of the yen rally in the first half of May. 111.15 follows.
110.40 (mentioned last week), is the next resistance line.
109.73 has held in resistance since the end of May.
109.35 is the next resistance line.
108.70 was tested in resistance early in the week.
108.10 was a swing low in late May.
107.50 capped the pair in early April.
106.61 is next.
105.55 is the final support level for now.
I remain neutral on USD/JPY
It’s been a lazy June for the yen, which is showing little movement. Tensions in the Persian Gulf and the ongoing trade war between China and the U.S. have not sent investors running to the safe-haven yen. The U.S. economy remains strong, but the markets are prepared for a rate cut (or two) in the second half of the year.
Further reading:
Safe trading!
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