USD/JPY: Japanese growth slightly below expectations, eyes on Yellen now
Japan's economy grew at an annualised rate of 1.0% in October-December, posting a fourth straight quarter of expansion, led by solid exports and firmer capital expenditure. The preliminary reading for fourth-quarter GDP compared with the median estimate of 1.1% growth. It followed a revised 1.4% expansion in the prior quarter, the Cabinet Office data showed. On a quarter-on-quarter basis, GDP rose 0.2%, versus 0.3% growth expected by the market.
U.S. President Donald Trump did not discuss the currency or its strength at weekend talks with Japanese premier Shinzo Abe did likewise.
All eyes are fixed on testimony by Federal Reserve chief Janet Yellen this week after signs that other policymakers at the U.S. central bank are leaning towards more hikes in interest rates than the two currently priced in by markets. She is likely to reiterate the outlook for a few gradual hikes this year as the economy is close to the Fed’s goals. But the timing still depends on the data out in the next few months. We do not think that Yellen’s comments will support the USD.
Technical analysis
The USD/JPY corrective move extended through the cloud overnight to 114.16. We think that the USD/JPY move will be stopped in the area between two key resistance levels: 114.24 (38.2% fibo of December-February fall) and 114.52 (23.6% fibo of November-December rise).
Trading strategy
We have placed a sell order at 114.50, below an important resistance at 114.52. If our order is filled the target will be at 112.00, above February lows. Long-term outlook remains unchanged.
GrowthAces.com - Daily Forex Trading Strategies
Japan's economy grew at an annualised rate of 1.0% in October-December, posting a fourth straight quarter of expansion, led by solid exports and firmer capital expenditure. The preliminary reading for fourth-quarter GDP compared with the median estimate of 1.1% growth. It followed a revised 1.4% expansion in the prior quarter, the Cabinet Office data showed. On a quarter-on-quarter basis, GDP rose 0.2%, versus 0.3% growth expected by the market.
U.S. President Donald Trump did not discuss the currency or its strength at weekend talks with Japanese premier Shinzo Abe did likewise.
All eyes are fixed on testimony by Federal Reserve chief Janet Yellen this week after signs that other policymakers at the U.S. central bank are leaning towards more hikes in interest rates than the two currently priced in by markets. She is likely to reiterate the outlook for a few gradual hikes this year as the economy is close to the Fed’s goals. But the timing still depends on the data out in the next few months. We do not think that Yellen’s comments will support the USD.
Technical analysis
The USD/JPY corrective move extended through the cloud overnight to 114.16. We think that the USD/JPY move will be stopped in the area between two key resistance levels: 114.24 (38.2% fibo of December-February fall) and 114.52 (23.6% fibo of November-December rise).
Trading strategy
We have placed a sell order at 114.50, below an important resistance at 114.52. If our order is filled the target will be at 112.00, above February lows. Long-term outlook remains unchanged.
GrowthAces.com - Daily Forex Trading Strategies
