The Japanese Current Account measures the difference between imported and exported goods, services and other transfers. A reading which is higher than the market forecast is bearish for the dollar.
Here are all the details, and 5 possible outcomes for USD/JPY.
Published on Thursday at 23:50 GMT.
Indicator Background
Similar to the Trade Balance indicator, analysts track the level of the current account as an indicator of trends in foreign trade. This makes it an important indicator for investors and traders.
Current Account rose to 0.85T in April, which was well above the market forecast and marked its best level since November 2011. The markets are predicting a weaker reading in May, with an estimate of 0.65T. Will the indicator surprise the markets again this month?
Sentiments and levels
With the USD/JPY droppping below the pivotal 80 level without intervention from the BOJ, the pair may have to fend for itself, and might only receive minimal support from the central bank at this point, in the form of stealth intervention. As worries in the US and Europe mount, the demand for safe haven will likely balance this stealth intervention. So, the overall sentiment is neutral on JPY/USD towards this release.
Technical levels, from top to bottom: 81.43, 80.60, 80.30, 80, 79.60 and 78.30.
5 Scenarios
- Within expectations: 0.61T to 0.69T: In such a case, USD/JPY is likely to rise within range, with a small chance of breaking higher.
- Above expectations: 0.70T to 0.74T: An unexpected higher reading can send the pair below one support level.
- Well above expectations: Above 0.74T: A very strong reading could push USD/JPY downwards, and a second support level might be broken as a result.
- Below expectations: 0.56T to 0.60T: USD/JPY could move upwards on a weak reading and break one line of resistance.
- Well below expectations: Below 0.56T: In this scenario the pair could respond by dropping below two or more resistance lines.
For more about the yen, see the USD/JPY forecast.
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