As the G-20 summit is approaching and US President Trump and Chinese President Xi are scheduled to meet on the sidelines in order to discuss a potential end to the trade war, the US Dollar has rallied. Hopes are riding high, but forex traders will get a heavy dose of US economic data to digest before then. A final reading on first-quarter GDP will likely dictate price action. How will the USDJPY react to any surprise? Pending home sales as well as another regional manufacturing report are also anticipated to add volume and volatility to US Dollar related forex trading adjustments. Will today’s mix of economic data further advance the USDJPY or is a price action reversal in the making?
Here are the key factors to keep in mind today for US Dollar trades:
- US GDP: The Advanced US GDP for the first-quarter is predicted to increase by 3.2% annualized. Forex traders can compare this to the previous first-quarter GDP which increased by 3.1% annualized. Personal Consumption for the first-quarter is predicted to increase by 1.3% annualized. Forex traders can compare this to previous first-quarter Personal Consumption which increased by 1.3% annualized. The GDP Price Index for the first-quarter is predicted to increase by 0.8% annualized. Forex traders can compare this to the previous first-quarter GDP Price Index which increased by 0.8% annualized. The Core PCE for the first-quarter is predicted to increase by 1.0% annualized. Forex traders can compare this to the previous first-quarter Core PCE which increased by 1.0% annualized.
- US Initial Jobless Claims and Continuing Claims: US Initial Jobless Claims for the week of June 22nd are predicted at 220K and US Continuing Claims for the week of June 15th are predicted at 1,665K. Forex traders can compare this to US Initial Jobless Claims for the week of June 15th which were reported at 216K and to US Continuing Claims for the week of June 8th which were reported at 1,662K.
- US Pending Home Sales: US Pending Home Sales for May are predicted to increase by 1.0% monthly and by 0.7% annualized. Forex traders can compare this to US Pending Home Sales for April which decreased by 1.5% monthly and which increased by 0.4% annualized.
- US Kansas City Fed Manufacturing Activity Index: The US Kansas City Fed Manufacturing Activity Index for June is predicted at 0. Forex traders can compare this to the US Kansas City Fed Manufacturing Activity Index for May which was reported at 4.
The Japanese consumer continues to be cautious as this morning’s retail sales data showed. Monthly retail sales clocked in at half the expected increase while purchases at large retailers posted an unexpected contraction. The Japanese Yen weakened after the release of this data, but losses were kept in check as uncertainty about the outcome of this weekend’s G-20 summit continue to attract safe haven bids. The USDJPY is now approaching its next resistance level, how strong is bullish momentum? This fundamental analysis will explore where price action may be headed if a breakout occurs and if a reversal materializes.
Here are the key factors to keep in mind today for Japanese Yen trades:
- Japanese Retail Trade Data: Japanese Retail Trade for May increased by 0.3% monthly and by 1.2% annualized. Economists predicted an increase of 0.6% monthly and of 1.2% annualized. Forex traders can compare this to Japanese Retail Trade for April which decreased by 0.1% monthly and which increased by 0.4% annualized. Large Retailer’s Sales for April decreased by 0.5% monthly. Economists predicted an increase of 0.2% monthly. Forex traders can compare this to Large Retailer’s Sales for April which decreased by 1.8% monthly.
- 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 June 21st was reported at ¥445.4B and Japanese Buying Foreign Stocks was reported at ¥256.0B. Forex traders can compare this to Japanese Buying Foreign Bonds for the period ending June 14th which was reported at ¥330.5B and to Japanese Buying Foreign Stocks which was reported at ¥232.5B. Foreign Buying Japanese Bonds for the period ending June 21st was reported at ¥2,012.4B and Foreigners Buying Japanese Stocks was reported at -¥313.4B. Forex traders can compare this to Foreign Buying Japanese Bonds for the period ending June 14th which was reported at ¥535.7B and to Foreigners Buying Japanese Stocks which was reported at -¥94.3B.
Should price action for the USDJPY remain inside the or breakdown below the 107.800 to 108.800 zone the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 108.100
- Take Profit Zone: 108.500 – 109.000
- Stop Loss Level: 109.000
Should price action for the USDJPY breakout above 108.800 the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 109.350
- Take Profit Zone: 105.650 – 106.750
- Stop Loss Level: 109.000
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