Following last Friday’s stronger-than-expected US NFP report, analysts have downgraded their expectations for an interest rate cut by the US Fed. Going into the report, markets have priced in a 25 basis point cut with an almost 100% certainty after the US and China failed to reach a trade deal at the G-20 Summit in Osaka. The focus will now shift back to economic data and Germany reported a steeper annualized contraction in industrial production which prevented the Euro to advance. The German trade surplus expanded as exports picked up, but imports decreased further signalling the global economic slowdown. Forex traders will now await the Eurozone Sentix Investor Confidence for July which is expected to recover into positive territory. How will this impact forex trading in the EURJPY?
Here are the key factors to keep in mind today for Euro trades:
- German Industrial Production: German Industrial Production for May increased by 0.3% monthly and decreased by 3.7% annualized. Economists predicted an increase of 0.3% monthly and a decrease of 3.2% annualized. Forex traders can compare this to German Industrial Production for April which decreased by 2.0% monthly and by 2.3% annualized.
- German Trade Balance & German Current Account Balance: The German Trade Balance for May was reported at a €18.7B. Economists predicted a figure of €16.8B. Forex traders can compare this to German Trade Balance for April which was reported at €16.9B. Exports for May increased by 1.1% monthly and Imports decreased by 0.5% monthly. Economists predicted an increase of 0.5% monthly and of 0.3% monthly. Forex traders can compare this to Exports for April which decreased by 3.4% monthly and to Imports which decreased by 0.9% monthly. The German Current Account Balance for May was reported at a €16.5B. Economists predicted a figure of €12.5B. Forex traders can compare this to the German Current Account Balance for April which was reported at €22.6B.
- Eurozone Sentix Investor Confidence: Eurozone Sentix Investor Confidence for July is predicted at 0.2. Forex traders can compare this to Eurozone Sentix Investor Confidence for June which was reported at -3.3.
Another sign of a weakening global economy was the plunge in Japanese machine orders for May. Japan also posted a bigger than expected trade deficit for May, bank lending increased a slower clip and bankruptcies also rose. Rounding up the series of disappointing economic data was the Eco Watchers Survey which current conditions and the outlook in depressed territory. The EURJPY hovered at strong support levels. Will bulls be able to ignite a short-covering rally or are bears preparing for a breakdown? Today’s fundamental analysis will cover both possibilities.
Here are the key factors to keep in mind today for Japanese Yen trades:
- Japanese Current Account Balance and Trade Balance: The Preliminary Japanese Current Account Balance for May was reported at ¥1,594.8B. Economists predicted a figure of ¥1,395.3B. Forex traders can compare this to the Japanese Current Account Balance for April which was reported at ¥1,707.4B. The Preliminary Japanese Adjusted Current Account Balance for May was reported at ¥1,305.7B. Economists predicted a figure of ¥1,231.0B. Forex traders can compare this to the Japanese Adjusted Current Account Balance for April which was reported at ¥1,600.1B. The Preliminary Japanese Trade Balance for May was reported at -¥650.9B. Economists predicted a figure of -¥758.9B. Forex traders can compare this to the Japanese Trade Balance for April which was reported at -¥98.2B.
- Japanese Machine Orders: Japanese Machine Orders for May decreased by 7.8% monthly and by 3.7% annualized. Economists predicted a decrease of 3.7% monthly and of 3.6% annualized. Forex traders can compare this to Japanese Machine Orders for April which increased by 5.2% monthly and by 2.5% annualized.
- Japanese Bank Lending: Japanese Bank Lending including Trusts for June increased by 2.3% annualized and Japanese Bank Lending excluding Trusts increased by 2.4% annualized. Forex traders can compare this to Japanese Bank Lending including Trusts for May which increased by 2.6% annualized and to Japanese Bank Lending excluding Trusts which increased by 2.8% annualized.
- Japanese Bankruptcies: Japanese Bankruptcies for June increased by 6.37% annualized. Forex traders can compare this to Japanese Bankruptcies for May which decreased by 9.38% annualized.
- Japanese Eco Watchers Survey: The Japanese Eco Watchers Survey Current Index for June was reported at 44.0 and the Japanese Eco Watchers Survey Outlook Index was reported at 45.8. Economists predicted a figure of 43.8 and of 44.5. Forex traders can compare this to the Japanese Eco Watchers Survey Current Index for May which was reported at 44.1 and to the Japanese Eco Watchers Survey Outlook Index which was reported at 45.6.
Should price action for the EURJPY remain inside the or breakout above the 121.300 to 121.900 zone the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 121.600
- Take Profit Zone: 123.350 – 123.750
- Stop Loss Level: 120.950
Should price action for the EURJPY breakdown below 121.300 the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 120.750
- Take Profit Zone: 118.250 – 118.900
- Stop Loss Level: 121.300
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