Today, on August 29th, Japan delivered a news block of 4 economic reports during today's Asian trading session. The news block indicates that the economic recovery seen after the recent sales tax increase is unstable and inconsistent. Most likely, the recovery period is going to be longer than expected by the Bank of Japan.
As the result, of the ambiguous economic figures shown by those 4 reports, the US Dollar managed to gain 0,06% against the Japanese Yen.
The currency pair has been subject to geopolitical risks distracting investors from economic data, Market Leader reports.
The first news release of the news block indicated lower consumer prices in July coupled with higher unemployment in the Asian country. At the same time, inflation figures matched expectations. The rate of unemployment increased from 3,7% up to 3,8% during the reporting period. The core CPI increased by 3,3% y/y, thereby matching expectations as well.
At the same time, the Japanese labor market saw a slowdown during the reporting period for the first time since Abenomics was launched. Most likely, the recovery tendency in the local labor market is exhausted. At the same time, household spending dropped by 5,9% more (y/y) amid the forecast of 2,9%. We could also see a moderate improvement in the retail sales sector amid weaker industrial production.
Having analyzed the recent economic figures release by Japan, we could conclude that the actual pace of economic recovery in Japan is lower than planned. Based on the data, we can expect the Japanese GDP to gain only 4,0% y/y in Q3 2014.
USDJPY Prospects
As usual, Masterforex-V Academy is willing to provide us with the results of comprehensive analysis. The current state of affairs in the market of USDJPY (H1) looks as follows:
Today's economic news block contributed to slowing down the tendency of USD weakness against JPY. After setting a local low close to 103,55, a recovery took place at increased trading volume while the retracement wasn't supported by trading volume.
After breaking the MF 2 sloping channel the price broke above MA 21. All of this may well testify to the fact that the short-term retracement is about to be over.
If USD buyers push the price higher up to 103,88 and 103,99, we may see the price breaking the MF sloping channel, which will help the US Dollar to continue the rally up to 104,17 and 104,28.
Still, today is Friday, the trading week is nearly over. So, we can see profit-taking as traders and investors prefer to go risk averse while nearing the weekend. At the same time, all those geopolitical risks coming around Ukraine and Russia keep on affecting the currency market, especially the US Dollar. This means that the retracement may go further down to 103,52 and below.
