USD/JPY extends this week's rebound after better than expected Q2 GDP revision from US. GDP growth was revised down from 2.4% to 1.6% annualized, above consensus of 1.4%. GDP price index was revised up from 1.8% to 1.9%. USD/JPY jumps after the release and breaches 85 level. But no follow through buying is seen in dollar against other currencies yet, not is there follow through selling of yen. Markets are still cautious ahead of Bernanke's speech later in the US morning.
There is more rhetoric from Japan today. Prime minister Naoto Kan said that government is ready to take bold action in the currency market as "volatile movements in the currency market have a negative impact on economic and financial stability." Kan is expected to meet Shirakawa after the BoJ governor returns from US next week and before next BoJ meeting on Sept 6.
Other data released today saw UK Q2 GDP growth revised up from 1.1% qoq to 1.2%, from 1.6% yoy to 1.7% yoy. Swiss KOF leading indicators dropped slightly to 2.18 in August. Japan remained in deflation for the 17th month with national core CPI dropped -1.1% yoy in July. Unemployment rate improved from 5.3% to 5.2% in July though.
USD/JPY Mid-Day Outlook
Daily Pivots: (S1) 84.23; (P) 84.55; (R1) 84.78; More.
USD/JPY's rebound form 83.61 rebounds further and touches 4 hours 55 EMA as expected. Further rise could still be seen. But after all, note that upside is expected to be limited below 86.36 resistance and bring another fall. Below 84.27 minor support will flip intraday bias back to the downside first. Further break of 83.61 will confirm down trend resumption for next key level at 80 psychological support. However, note that decisive break of 86.36 resistance will argue that USD/JPY has formed a short term bottom at least and bring stronger rise towards 88.11 resistance first.
In the bigger picture, whole down trend from 2007 high of 124.13 is still in progress and has resumed by the strong break of 84.81 low. Current decline is expected to continue towards 79.75 (1995 low) next. On the upside, break of 94.97 resistance is needed to be the first signal of medium term reversal. Otherwise, outlook will remain bearish.
Economic Indicators Update
| GMT | Ccy | Events | Actual | Consensus | Previous | Revised |
|---|---|---|---|---|---|---|
| 23:30 | JPY | Tokyo CPI Core Y/Y Aug | -1.10% | -1.20% | -1.30% | |
| 23:30 | JPY | National CPI Core Y/Y Jul | -1.10% | -1.10% | -1.00% | |
| 23:30 | JPY | Unemployment Rate Jul | 5.20% | 5.30% | 5.30% | |
| 23:30 | JPY | Household Spending Y/Y Jul | 1.10% | 1.60% | 0.50% | |
| 08:30 | GBP | GDP Q/Q Q2 P | 1.20% | 1.10% | 1.10% | |
| 08:30 | GBP | GDP Y/Y Q2 P | 1.70% | 1.60% | 1.60% | |
| 08:30 | GBP | Index of Services 3M/3M Jun | 0.70% | 0.70% | 0.80% | 1.00% |
| 09:30 | CHF | KOF Leading Indicator Aug | 2.18 | 2.25 | 2.23 | 2.22 |
| 12:30 | USD | GDP (Annualized) Q2 P | 1.60% | 1.40% | 2.40% | |
| 12:30 | USD | GDP Price Index Q2 P | 1.90% | 1.80% | 1.80% | |
| 13:55 | USD | U. of Michigan Confidence Aug F | 70 | 69.6 | ||
| 14:00 | USD | Fed Chairman Ben Bernanke Speaks | -- | -- | ||
| -- | EUR | German CPI M/M Aug P | 0.20% | 0.30% | ||
| -- | EUR | German CPI Y/Y Aug P | 1.10% | 1.20% |
