The oil prices rally and world central banks’ dovish monetary policy caused by the Covid-19 pandemic were the main reasons for current inflation growth…
USD/JPY: OUTLOOK FOR AUGUST 25 - SEPTEMBER 1
2019-11-11 • Updated
USD/JPY consolidated within the downtrend channel drawn from July highs. The pair has now approached the resistance line of this channel and we are soon to see a breakthrough to the either side.
Tokyo CPI for August was encouraging: inflation accelerated from 0.2% to 0.5% y/y. The 2% inflation target is still very far away, but some progress has been made.
Next week Japan will release unemployment rates, retail sales, industrial production, consumer confidence and other indicators. Remember though that USD/JPY depends more on the figures out of the United States. The US will release consumer confidence on Tuesday, ADP employment report and preliminary GDP for the second quarter on Wednesday, core PCE price index and personal spending on Thursday and NFP together with ISM manufacturing PMI on Friday.
The current resistance line at 109.80 is reinforced by the former support and now resistance line connecting April and June lows. Support is at 108.80. A decline below this level is needed to bring the pair down to 108.00 and 107.50.
The past several weeks have been a real triumph for the bulls in the oil market. The Brent spot price grew by 8.5% during the last month.
Gold prices are rising for three consecutive days ahead of the Federal Reserve (Fed) interest rate decision, which is expected to remain unchanged due to declining inflation and a positive economic outlook. Investors are keen on the Fed's interest rate guidance, fearing a hawkish stance that could trigger market risk aversion.
Amid concerns of a Chinese economic slowdown, reports of declining investment often overlook China's efficient investment strategy in emerging sectors for long-term growth. China has taken measures to stabilize foreign and private sector investments, like reducing the reserve requirement ratio to boost investor confidence.