- MarketPulse - https://www.marketpulse.com -

USD/JPY – dollar shrugs off soft Final GDP

The Japanese yen has ticked higher in the Thursday session. In North American trade, USD/JPY is trading at 110.37, up 0.10% on the day. On the release front, Japanese retail sales dropped to 0.6%, its lowest gain since October. Later in the day, Japan releases Tokyo Core CPI, which is expected to edge up to 0.6 percent. In the U.S, Final GDP in Q1 slipped to 2.0%, missing the estimate of 2.2%. Unemployment claims jumped to 227 thousand, well above the estimate of 220 thousand. On Friday, Japan releases consumer confidence. The U.S will publish consumer spending and inflation reports, as well as UoM Consumer Sentiment.

U.S numbers were soft for a second straight day on Thursday, but the dollar has managed to hold its own against the yen. Final GDP dipped to 2.0%, weaker than the second estimate of GDP in May, which showed growth of 2.0%. Much of the slowdown is being attributed to weaker consumer spending in the first quarter. There are expectations of banner growth in the second quarter, with some analysts predicting growth of over 5 percent, as the massive January tax cut should boost economic growth. However, the escalating trade war between the U.S and its trading partners, especially China, could dampen second quarter GDP. Trade tensions show no sign of easing, with President Trump threatening tariffs on some $250 billion in Chinese goods. On Wednesday, U.S durable goods reports in May were a disappointment. Core durable goods orders declined 0.3%, well of the estimate of 0.5% and a 4-month low. Durable goods orders declined for a second straight month, with a reading of -0.6%. Still, this was better than the forecast of -0.9%. 

As the second quarter draws to a close, the U.S economy continues to perform well. Economic growth has been strong and the labor market is close to capacity. However, the trade war between the U.S and its major partners could be the dark cloud on the horizon. The Federal Reserve now plans to raise rates four times in 2018 (up from three), but a global trade war could force the Fed to revise its forecast back to three hikes. On Tuesday, Atlanta Fed bank president Raphael Bostic said that if the trade war intensified, he would vote against a fourth rate hike, due to downside risks to the economy. Fed Chair Jerome Powell sounded pessimistic about the economic effects of trade tensions at an ECB forum earlier in June, and if other Fed members express concerns, a fourth rate hike could be delayed until 2019.

  Confusion reigns supreme [1]

  Markets remain under pressure on trade concerns [2]

  Dollar rises to new heights against G10 and EM pairs [3]

USD/JPY Fundamentals

Wednesday (June 27)

Thursday (June 28)

Friday (June 29)

*All release times are DST

*Key events are in bold

USD/JPY for Thursday, June 28, 2018

USD/JPY June 28 at 11:05 DST

Open: 110.26 High: 110.42 Low: 109.97 Close: 110.33

USD/JPY Technical

S3 S2 S1 R1 R2 R3
108.31 109.21 110.21 111.22 112.30 113.75

In Asian trade, USD/JPY ticked lower but then recovered in the Asian session. The pair has posted slight losses in the European session but has recovered in North American trade

Further levels in both directions:

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

Kenny Fisher [7]

Market Analyst at OANDA [8]
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher

Latest posts by Kenny Fisher (see all [7])