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The US Core Durable Goods Orders indicator measures the  change  in value of durable goods orders placed with manufacturers, excluding transportation items. A reading which is higher than the market forecast is bullish for the dollar.

Here are all the details, and 5 possible outcomes for USD/JPY.

Published on Tuesday at 12:30 GMT.

Indicator Background

Core Durable Goods  Orders is an important barometer of the direction of the economy. Businesses tend  to  order durable goods when they are confident the economy is improving. When businesses increase their purchases, this in turn benefits and strengthens the   economy.

The indicator has shown some sharp swings from month to month, making accurate forecasts a tricky task. In the May reading, the indicator posted a strong gain of 1.3%, which easily beat the estimate of 0.6%. However, the markets are bracing for a weak release in June, with an estimate of -0.1%. Will the indicator repeat and surprise the markets with a strong reading?

Sentiments and levels

The yen has had a  very strong June,  but  the rally  ran out of  steam last week as  the  broadly strong dollar  rebounded, thanks to the  news that the  Federal  Reserve was planning to  taper QE.  The fallout from the QE announcement may not be over, and we could see the pair move closer to the 100 level. So, the overall sentiment is bullish on USD/JPY towards this release.

Technical levels, from top to bottom: 100.85, 100.00, 98.90, 97.80, 97 and 96.71.

5 Scenarios

  1. Within expectations:  -0.3% to  0.1%. In such a case, USD/JPY is likely to rise within range, with a small chance of breaking higher.
  2. Above expectations: 0.4% to 0.7%: An unexpected higher reading can send the pair above one resistance line.
  3. Well above expectations: Above 0.7%: A sharp jump could push USD/JPY upwards, and a second resistance line might be broken as a result.
  4. Below expectations:  -0.7% to -0.4%: A weak reading could push USD/JPY downwards and break one level of support.
  5. Well below expectations: Below -0.7%: A sharp drop by the indicator could push the pair downwards, possibly breaking a second support level.

For more on the yen, see the USD/JPY forecast.

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