USD/JPY Goes Up Despite Better GDP Data From Japan

USD/JPY Goes Up Despite Better GDP Data From Japan

  • Japan’s economy expanded by an annualised 2.2% in the third quarter, faster than the 0.9% increase markets had expected, following a 0.7% increase in April-June.
  • Net exports added 0.5 percentage point to GDP, due to a bounce in exports from the prior quarter, and falling imports caused by yen gains, oil price declines and weak domestic demand. It marked the biggest contribution since April-June 2014 as exports grew 2.0%, the fastest gain in a year.
  • Private consumption rose 0.1%, unchanged from the second quarter, partly as typhoons and bad weather undermined consumer spending. It adds to concerns that the benefits of Prime Minister Shinzo Abe’s Abenomics stimulus drive are yet to spread to households – as seen in tepid annual wage rises.

Japanese GDP Growth

  • Bank of Japan Governor Haruhiko Kuroda said the economy is sustaining momentum towards hitting the central bank’s 2% inflation target but risks are tilted to the downside due to uncertainty over overseas economies.
  • He acknowledged that private consumption was “somewhat lacking momentum” and making some companies hesitant of raising prices of their goods and services. Kuroda stressed that next year’s wage negotiations between companies and labour unions would be crucial to whether Japan will see inflation accelerate toward 2%. He added that a tightening job market is expected to gradually push up wages. The hit to inflation from falling oil costs will dissipate early next year and help Japan’s consumer inflation turn positive in coming months, Kuroda said.
  • Big swing higher adds to the bullish structure for 108.52 (76.4% retrace of the 111.45 to 99.00 May-June fall). Huge long lower shadow on last Wednesday’s candlestick line underpins spot. We have raised our bid to 106.25.

USD/JPY Daily Forex Signals Chart

NZD/USD Hit 1-Month Low After Earthquake

  • A powerful 7.8 magnitude earthquake pummelled central New Zealand early on Monday, killing at least two people. New Zealand’s Civil Defence declared a state of emergency for the Kaikoura region, centred on a tourist town about 150 km (90 miles) northeast of Christchurch, soon after Monday’s large aftershock.
  • The NZD slipped to near one-month lows on Monday. This drop was also supported by a rise in U.S. Treasury yields.
  • Traders expect the kiwi to rebound in anticipation of payouts from insurers overseas while rebuilding work is likely to support an already strong economy, reducing the need for further interest rate cuts.
  • Our NZD/USD long positions were stopped after the earthquake and we think markets will trade ultra-cautiously until greater clarity on the extent of damage is available.

NZD/USD Daily Forex Signals Chart

Source: – Daily Forex Trading Strategies

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