Japan’s second quarter GDP revised down 0.6%, USDJPY eyes 107.35

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Japan’s economic growth in the second quarter fell 0.6%, from 1.0%. missing forecast of 0.7% a month earlier.

The downgrade was widely expected after data used to revised gross domestic product (GDP) figures showed capital spending growth in April-June slowed from the previous quarter.

Anyway, the disappointing data may weaken confidence in the government’s economic policies and business outlook, analysts still expect the economy to maintain a steady recovery while supporting strong global demand for exports, and a tightening labor market improves the probability of higher wages.

Conclusion: our forecast; this development may put the Japanese Yen temporarily under pressure but since the pair is bearish (technically) on a daily and weekly basis, this scenario is likely to bring selling opportunities to USDJPY.

Technical outlook: As long as 109.25 resistance holds on a daily closing basis, the pair remains on the downside towards the 107.35 levels, a halt is likely but a cut would open 106.40, further down support comes at the 105.40 levels.

On the upside, above 109.25 sees a corrective recovery to 109.55/111.00 levels where another fall is likely…

Conclusion: The USDJPY continues to face downside threats below the 109.25 levels. (minor resistance 108.20)…

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