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In Japan, last week’s data was a mixed bag. Tokyo Core CPI remained stuck at 0.5%, shy of the estimate of 0.7%. Japanese retail sales jumped 9.1%, the highest monthly gain since 2014. The strong reading was due to Japanese consumers making purchases ahead of a national sales tax which commenced in October.
In the U.S, there was positive news from the GDP report for the third quarter. The initial GDP release was stronger than expected. The economy gained 1.9%, beating the forecast of 1.6%. Employment numbers were mixed. Wage growth improved to 0.2%, up from 0.0%. However, this fell short of the forecast of 0.3%. Nonfarm payrolls slipped to 128 thousand, but this beat the forecast of 90 thousand. As well, the Federal Reserve lowered rates for a third straight month, putting pressure on the U.S. dollar.
Updates:
We start with resistance at 111.62, which was last active in April. 110.62 is next.
109.73 has held in resistance since the end of May. 109.35 is close by.
108.70 remains relevant.
108.10 is providing weak support.
107.30 (mentioned last week) has some breathing room in support. This line switched to support in early October, at the start of the most recent dollar rally.
106.61 is next.
105.55 has held in support since late August.
104.65 was last tested in January. It is the final support line for now.
I remain bullish on USD/JPY
The new sales tax could dampen consumer spending, which would hurt an already fragile economy. Weak global demand has taken a toll on the Japanese exports and manufacturing sectors. With risk appetite steady, the safe-haven yen will have trouble attracting investors.
Further reading:
Safe trading!
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