Greenback Back with a Bang in September Retail Sales

British PoundThe Greenback was able to make a solid performance against Yen as well as other G10 currencies in the 1st week of September after the anticipation of Federal Reserve hike rate increased in December. The tax reform planning by the United States President Donald Trump has also pushed the US dollar upwards.

On the other hand, the Yen has weakened considerably after a rally in the stock market of Japan. The USD/JPY currency pair was able to reach a high figure of 113.40 from 107.31 last week.

In the coming days, we expect the uptrend in the USD/JPY currency pair to continue, and the reasons for the same is discussed underneath below.

In the recent months, the economic data of Japan is showing positive results. According to the Ministry of Finance, the government has reported an account surplus of ¥2.27 trillion in August 2017 as compared to ¥2.03 trillion surpluses in July 2017. The analysts were expecting an account surplus of ¥1.98 trillion.

This news was followed by a report from the Cabinet Office of an increase in Economy Watchers Sentiment Index reading of 51.3 in September 2017 as compared to 49.7 in the earlier month. The passage also surpassed the expectation of the economists of 50.2. The last highest reading of 51.4 was recorded in December 2016. On last Wednesday, the Cabinet Office reported a monthly rise of 3.4% in core machinery orders in August 2017. The order for core machinery registered 8% growth in July 2017.

As a result of the solid corporate earnings and positive economic data of Japan, the Nikkei Index was pushed to a 21 years high figure of 21,000 on last Friday. It suggests for the chances of further decline in value of Yen as the safe-haven currency is having a different inverse correlation with the Japanese economy and stock exchange in general.

Core Finance

The Bureau of Labor Statistics in the United States has reported a monthly increase of 0.5% in consumer prices in September 2017 as compared to the analysts’ expectation of a monthly increase of 0.6%. It is to be noted that the reported figures above were more than 0.4% growth witnessed in August 2017. Similarly, there is 1.6% monthly growth in retail sales in September 2017. There was a decline of 0.1% in retail sales in August. Analysts were hoping the retail sales to grow by 1.7%.

Core retail sales registered 1% growth in September as compared to analysts’ expectation of 0.9% and more than 0.5% reported in its earlier month. The excellent performance in retail sales and increase in inflation has increased the likelihood of a rate hike in December 2017. Hence, the expectation of rate hike and robust economic data of Japan suggests Greenback rally against Yen.

GBPUSD Pair Oct 20th 2017

GBPUSD Pair Oct 20th, 2017

As evident from the chart above, the historical price chart is showing strong support for the USD/JPY currency pair at 111.70. At the same time, William’s Percentage Range Indicator is in oversold region. Hence a bullish trend reversal is expected shortly.

Right now, a LONG position would be ideal to make a profit from this possible uptrend. In FX market, traders are suggested to open a position near 111.70 and place stop order below 110.80. Profits can be booked when the USD/JPY currency pair reaches 113.50 where the next primary resistance level exists. Based on the featured list of Forex brokers over here, you are recommended to purchase a call option with a validity period of 7 days and strike price of around 111.70.

Rich Archer

Rich Archer

Hi, my name is Rich Archer. I am living in London. Welcome to Binary Manual. Reach to Binary Options broker reviews and market news here.


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