USD in a Strong Position due to Great September Retail Sales

US DollarIn the first week of September 2017, Greenback was able to gain momentum against Yen and other major G10 currencies. It was because of the expected Fed rate hike in December. The US Dollar was also able to push up in the market because of the expectation of a tax reform plan from the US President Donald Trump.

On the other hand, Yen got weakened because of a rally in the Japanese market. The USD/JPY currency pair rallied from 107.31 to reach a high figure of 113.40 in the last week.

In the coming days, we expect the currency pair to rise in the market, and the reasons for the same are discussed below.

In the recent past, a series of positive data has come out of Japan. In a report submitted by Ministry of Finance, there is a surplus of 2.27 trillion Yen in August as compared to 2.03 trillion Yen surplus in July. A surplus of 1.98 trillion Yen was anticipated by the analysts.

London Capital Group

A report from the Cabinet Office talks about the rise in Economy Watchers Sentiment Index reading from 49.7 in August to 51.3 in September. It is better than the analysts’ expectation of 50.2. This is the highest reading since December 2016 when the sentiment index recorded a reading of 51.4. On last Wednesday, a report from the Cabinet Office stated about an increase of 3.4% in a month on month in core machinery orders in August. The core machinery order has increased by 18 percent in July 2017.

The solid corporate earnings and economic data have improved the economy of Japan to a great extent. This, in turn, has pushed the Nikkei index to 21,000 on Friday which is a 21-year high figure. It suggests that Yen currency is likely to get weakened as safe currency haven has a unique inverse correlation with the economy and stock exchange of Japan in general.

The Bureau of Labor Statistics in the United States has reported an increase of 0.5% on M-O-M in consumer prices for September 2017 as compared to market expectations of 0.6 percent. The figures of September were more than 0.4% growth for August. In a likewise manner, there is a growth of 1.6% in retail sales for September on the M-O-M basis. The retail sales in August dipped low by 0.1 percent. Analysts expected the retail sales to grow by 1.7 percent.

The core retail sales grew by 1 percent as compared to 0.9 percent expected by the analysts and more than 0.5% as compared to August. The odds of rate hike have considerably increased after strong retail sales and rise of inflation. Hence, we can expect Greenback to rally against Yen after a robust economic data and rate hike expectations.

USDJPY Pair October 16th 2017

USDJPY Pair October 16th, 2017

From the figure above, the historical price chart is showing a support level at 111.70 for USD/JPY currency pair. The Williams’ Percentage Indicator is in the oversold region. Hence we can expect the bullish trend reversal shortly.

To make a profit from the uptrend, it is recommended to invest in a LONG position. One may open the position around 111.70 and place stop order below 110.80. Profits can be booked when the currency pair reaches 113.50 where the next significant resistance exists. Traders can buy a call option from any of the trustworthy Forex brokers listed over here and select the expiry period of 1 week. The strike price of around 111.70 would be ideal for the trade.

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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