Uncle Sam’s manufacturing PMI is up today!
Will the reports support the Fed easing up its aggressive interest rate hikes?
I’m checking USD/JPY’s 4-hour chart for trade opportunities!
Before moving on, ICYMI, I’ve listed the potential economic catalysts that you need to watch out for this week. Check them out before you place your first trades today!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
Australian markets out on bank holiday
China’s manufacturing sector contracts (49.0), home sales fall sharply in July
China’s non-manufacturing PMI slows down from 54.7 to 53.8 in JulyChina’s Caixin manufacturing PMI grows at a slower pace, down from 51.7 to 50.4 in July
AiG manufacturing PMI slowed from 54.0 to 52.5 in July
NZ building consents down by 2.3% in June vs. 0.5% decline in May
Melbourne Institute inflation gauge up by 1.2%, its fastest rate in two decades
Australia job ads dip 1.1% in July, strong rally may have passed peak
German retail sales drop sharply (-1.6%) as consumers tighten their belts in June
Upcoming Potential Catalysts on the Forex Economic Calendar:
Swiss markets out on bank holiday
Canada’s markets out on bank holiday
U.S. ISM manufacturing PMI at 2:00 pm GMT
AU building approvals at 1:30 am GMT (Aug 2)
RBA’s policy decision at 4:30 am GMT (Aug 2)
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
What to Watch: USD/JPY
In case you missed it, the dollar has been struggling against the yen since mid-July when USD/JPY found resistance at the 140.00 psychological handle.
Last week’s developments didn’t help the dollar either. Gov. Powell and his team shared that their next interest rate hikes would be “data dependent,” which markets took to mean “50 bps or lower.”The prospect of a less hawkish Fed plan sent USD/JPY lower and now the pair is trading closer to 132.50.
Let’s see if USD finds buyers at the area. A quick look at the 4-hour chart shows that the 132.00 zone was a resistance back in May and a support zone in June. This time around, the area would line up with the 61.8% Fibonacci level of the last major upswing.
A weaker-than-expected manufacturing PMI from the U.S. could lead to a “bad news is good news” scenario for risk-taking and send USD/JPY below the support area that we’re watching.
USD/JPY could drop to 130.00 before seeing more buyers.
On the other hand, worries over global growth slowdown could extend USD/JPY’s longer-term uptrend.
A bounce from the 131.00 – 132.00 area could bump USD/JPY back up to 135.00 or higher.