Forex traders will get initial jobless claims data today, which has been ticking higher. The Leading Index for December is expected to show a contraction, while a regional manufacturing report is expected to the recession in the sector is ongoing. How will the USDJPY react following the release of economic data after completing a breakdown? Subscribe to the PaxForex Daily Fundamental Analysis and grow your balance trade-by-trade.
The Japanese trade balance posted a smaller-than-expected deficit as the slump in exports was offset by a drop in imports. Global growth fears increased once again, prompting a flight to safe-haven assets. Countering the disappointing trade data was a better-than-expected increase in the All Industry Activity Index. The USDJPY added to the breakdown below its horizontal resistance area, will the sell-off accelerate? Today’s fundamental analysis will take a look at the upside potential as well as the downside risk in this currency pair.
Here are the key factors to keep in mind today for US Dollar trades:
- US Initial Jobless Claims and Continuing Claims: US Initial Jobless Claims for the week of January 18th are predicted at 215K and US Continuing Claims for the week of January 11th are predicted at 1,750K. Forex traders can compare this to US Initial Jobless Claims for the week of January 11th, which were reported at 204K and to US Continuing Claims for the week of January 4th, which were reported at 1,767K.
- US Leading Index: The US Leading Index for December is predicted to decrease by 0.2% monthly. Forex traders can compare this to the US Leading Index for November, which was reported flat at 0.0% monthly.
- US Kansas City Fed Manufacturing Activity Index: The US Kansas City Fed Manufacturing Activity Index for January is predicted at -6. Forex traders can compare this to the US Kansas City Fed Manufacturing Activity Index for December, which was reported at -8.
Here are the key factors to keep in mind today for Japanese Yen trades:
- Japanese Trade Balance: The Japanese Trade Balance for December was reported at -¥152.5B. Economists predicted a figure of -¥152.6B. Forex traders can compare this to the Japanese Trade Balance for November, which was reported at -¥85.2B. The Japanese Adjusted Trade Balance for December was reported at -¥102.5B. Economists predicted a figure of -¥236.0B. Forex traders can compare this to the Japanese Adjusted Trade Balance for November, which was reported at -¥91.9B. Exports for December decreased by 6.3% annualized and Imports decreased by 4.9% annualized. Economists predicted a decrease of 4.3% and 3.2%. Forex traders can compare this to Exports for November, which decreased by 7.9% annualized, and to Imports which decreased by 15.7% annualized.
- Japanese Buying Foreign Bonds and Japanese Buying Foreign Stocks/Foreign Buying Japanese Bonds and Foreigners Buying Japanese Stocks: Japanese Buying Foreign Bonds for the period ending January 17th was reported at ¥175.1B and Japanese Buying Foreign Stocks was reported at ¥140.4B. Forex traders can compare this to Japanese Buying Foreign Bonds for the period ending January 10th, which was reported at ¥2,329.7B and to Japanese Buying Foreign Stocks, which was reported at ¥138.7B. Foreign Buying Japanese Bonds for the period ending January 17th was reported at -¥436.4B and Foreigners Buying Japanese Stocks was reported at ¥263.8B. Forex traders can compare this to Foreign Buying Japanese Bonds for the period ending January 10th, which was reported at ¥205.8B and to Foreigners Buying Japanese Stocks, which was reported at -¥16.4B.
- Japanese All Industry Activity Index: The Japanese All Industry Activity Index for November increased by 0.9% monthly. Economists predicted an increase of 0.4% monthly. Forex traders can compare this to the Japanese All Industry Activity Index for October, which was decreased by 4.8% monthly.
- Japanese Leading Index and Japanese Coincident Index: The Final Japanese Leading Index for November was reported at 90.8 and the Final Japanese Coincident Index was reported at 94.7. Forex traders can compare this to the previous Japanese Leading Index for November, which was reported at 90.9 and to the previous Japanese Coincident Index, which was reported at 95.1.
- Japanese Machine Tool Orders: Japanese Preliminary Machine Tool Orders for December decreased by 28.5% annualized. Forex traders can compare this to Japanese Machine Tool Orders for November, which decreased by 33.6% annualized.
Should price action for the USDJPY remain inside the or breakdown below the 109.400 to 109.800 zone the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 109.550
- Take Profit Zone: 107.650 – 108.200
- Stop Loss Level: 110.250
Should price action for the USDJPY breakout above 109.800 the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 110.250
- Take Profit Zone: 111.350 – 111.800
- Stop Loss Level: 109.800
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