USD/JPY: outlook for August 8-14
USD/JPY tested lower levels as it slid to support at 100.70.
Japanese cabinet approved 13.5 trillion yen ($132.04 billion) in fiscal measures on Tuesday to revive the nation’s economy. There was no significant impact on the market from the decision as the news about this stimulus package were out a week before. Although the regulator announced plans to review stimulus program in September, traders fear that the Bank of Japan has run out of monetary policy tools.
Good nonfarm July payrolls provided a positive driver for USD/JPY. However, the overall downtrend is still in place, and we believe that recovery represents nothing more but correction. Resistance lies at 102.50 and 103.60. Break below 100.70 will open the way down to 100.00.
Japan will release current account figures on Monday and core machinery orders together with tertiary industry activity figures on Wednesday. Rapidly expanding current account surplus is a source of negative pressure on USD/JPY. Also pay attention to statistics from China that will have an impact on the market’s risk sentiment: the nation will release trade balance on Monday, inflation on Tuesday and industrial production on Friday.