Today’s CPI data out of the US is expected to confirm the absence of inflationary pressures. The US Fed will meet next week and markets expect a 25 basis point interest rate cut to be delivered. President Trump has stepped up his attacks on the Fed, led by Powell whom he appointed as Fed Chief, and suggested the Fed should consider negative interest rates. He further pointed out that the US should rebalance its debt load which is above 100% of GDP. Can the US Dollar handle a more dovish central bank and how will this impact the USDJPY? Today’s fundamental analysis will explore price action in both directions.
Economic data out of Japan was mixed with machine order contracting together with the Domestic Corporate Goods Price Index, but the Tertiary Industry Index surprised to the upside. Trade rhetoric between the US and China has eased over the past few days as both sides prepare for the next round of trade talks in October. This has resulted in a sell-off in the Japanese Yen which pushed the USDJPY into extreme overbought conditions. Is a price action reversal on the horizon? Subscribe to the PaxForex Daily Fundamental Analysis and earn over 5,000 pips per month in profits.
Here are the key factors to keep in mind today for US Dollar trades:
- US CPI: The US CPI for August is predicted to increase by 0.1% monthly and by 1.8% annualized. Forex traders can compare this to the US CPI for July which increased by 0.3% monthly and by 1.8% annualized. The US Core CPI for August is predicted to increase by 0.2% monthly and by 2.3% annualized. Forex traders can compare this to the US Core CPI for July which increased by 0.3% monthly by 2.2% annualized.
- US Initial Jobless Claims and Continuing Claims: US Initial Jobless Claims for the week of September 7th are predicted at 215K and US Continuing Claims for the week of August 31st are predicted at 1,675K. Forex traders can compare this to US Initial Jobless Claims for the week of August 31st which were reported at 217K and to US Continuing Claims for the week of August 24th which were reported at 1,662K.
- US Monthly Budget Statement: The US Monthly Budget Statement for August is predicted at -$160.5B. Forex traders can compare this to the US Monthly Budget Statement for July which was reported at -$120.0B.
Here are the key factors to keep in mind today for Japanese Yen trades:
- 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 September 6th was reported at ¥724.4B and Japanese Buying Foreign Stocks was reported at -¥25.4B. Forex traders can compare this to Japanese Buying Foreign Bonds for the period ending August 30th which was reported at ¥1,495.7B and to Japanese Buying Foreign Stocks which was reported at ¥210.9B. Foreign Buying Japanese Bonds for the period ending September 6th was reported at ¥441.1B and Foreigners Buying Japanese Stocks was reported at -¥161.3B. Forex traders can compare this to Foreign Buying Japanese Bonds for the period ending August 30th which was reported at ¥26.8B and to Foreigners Buying Japanese Stocks which was reported at -¥89.5B.
- Japanese Domestic Corporate Goods Price Index: The Japanese Domestic Corporate Goods Price Index for August decreased by 0.3% monthly and by 0.9% annualized. Economists predicted a decrease of 0.2% monthly and of 0.8% annualized. Forex traders can compare this to the Japanese Domestic Corporate Goods Price Index for July which was reported flat at 0.0% monthly and which decreased by 0.6% annualized.
- Japanese Machine Orders: Japanese Machine Orders for July decreased by 6.6% monthly and increased by 0.3% annualized. Economists predicted a decrease of 8.0% monthly and of 3.7% annualized. Forex traders can compare this to Japanese Machine Orders for June which increased by 13.9% monthly and by 12.5% annualized.
- Japanese Tertiary Industry Index: The Japanese Tertiary Industry Index for July increased by 0.1% monthly. Economists predicted a decrease of 0.3% monthly. Forex traders can compare this to the Japanese Tertiary Industry Index for June which decreased by 0.1% monthly.
Should price action for the USDJPY remain inside the or breakdown below the 107.750 to 108.150 zone the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 108.000
- Take Profit Zone: 105.000 – 105.650
- Stop Loss Level: 108.750
Should price action for the USDJPY breakout above 108.150 the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 108.750
- Take Profit Zone: 109.900 – 110.650
- Stop Loss Level: 108.150
Open your PaxForex Trading Account now and add this currency pair to your forex portfolio. An excellent broker forex relationship is key to the success of any partnership. Find out why more traders trust PaxForex and prefer to grow their accounts there and how you can benefit from you own PaxForex Trading Account!
We are one of the fastest growing Forex Brokers in the Market. Trade with PaxForex to get the full Forex Trading experience which is based on...
- The Reliability on all Assets in the Market
- Trusted Worldwide for over a Decade
- Live Multi-Lingual Online Support 24/5
