Source: PaxForex Premium Analytics Portal, Fundamental Insight
Japanese Household Spending for April rose 1.0% monthly and decreased 1.7% annualized. Economists predicted an increase of 1.3% and a drop of 0.8%. Forex traders can compare this to Japanese Household Spending for March, which expanded by 4.1% monthly and decreased by 2.3% annualized.
Japanese Average Cash Earnings for April increased by 1.7% annualized and Japanese Overtime Pay by 5.9% annualized. Forex traders can compare this to Japanese Average Cash Earnings for March, which rose 1.2% annualized, and Japanese Overtime Pay, which increased 2.5% annualized.
Japanese Foreign Reserves for May came in at $1,329.7B. Forex traders can compare this to Japanese Foreign Reserves for April, reported at $1,322.2B. The Preliminary Japanese Leading Index for April came in at 102.9, and the Preliminary Japanese Coincident Index at 96.8. Forex traders can compare this to the Japanese Leading Index for March, reported at 100.8, and the Japanese Coincident Index at 96.8.
The UK Markit/CIPS Services PMI for May is predicted at 51.8, and the UK Markit/CIPS Composite PMI at 51.8. Forex traders can compare this to the UK Markit/CIPS Services PMI for April, reported at 58.9, and the UK Markit/CIPS Composite PMI at 58.2.
Financial markets are on course for heavy selling as a light economic calendar provides little incentives for a bullish session. The Reserve Bank of Australia increased interest rates by 50 basis points to 0.85%, above expectation for a 25 basis point rise to 0.60%. The RBA remains well behind the curve. German factory orders for April unexpectedly dropped 2.7%, following the 4.2% contraction in March, while forecasters hoped for a 0.3% rise. Spain offered a rare bright spot with an unexpected increase in April industrial production. The global trend of a slowing economy, high inflation, and tightening monetary policy remains intact.
The forecast for the GBP/JPY turned negative following a 1,000+ pips rally that took this currency pair above its slowly ascending Ichimoku Kinko Hyo Cloud. Volatility is expected to surge as the Tenkan-sen, and the Kijun-sen drift higher, as the weight of the powerful move higher threatens a medium-term collapse into its Senkou Span B and below. Traders should monitor the CCI for a breakdown from extreme overbought territory. It could trigger a profit-taking sell-off. Can bears wrestle control from bulls and pressure the GBP/JPY into its horizontal support area? Subscribe to the PaxForex Daily Fundamental Analysis and earn over 5,000 pips per month.
Should price action for the GBP/JPY remain inside the or breakdown below the 164.600 to 166.400 zone, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 165.400
- Take Profit Zone: 157.800 – 159.700
- Stop Loss Level: 167.200
Should price action for the GBP/JPY breakout above 166.400, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 167.200
- Take Profit Zone: 169.400 – 170.350
- Stop Loss Level: 166.400
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