Japanese Yen: USD/JPY (JPY=X) Upbeat China Data Support Treasury Yields, Appetite for Risk

Japanese Yen: USD/JPY (JPY=X) Upbeat China Data Support Treasury Yields, Appetite for Risk

Japanese Yen: USD/JPY (JPY=X) Upbeat China Data Support Treasury Yields, Appetite for Risk

Helping to boost Treasury yields and demand for risky assets is the stronger-than-expected economic numbers from China. The data confirms the economy is bottoming out, mostly due to the stimulus from the Chinese economy.

The headline data shows that China’s economy grew 6.4 percent in the first quarter of 2019, beating analysts’ forecasts. Traders were pricing in a 6.3 percent increase year-on-year in the first three months of the year.

Other data showed Industrial Production grew 8.5%, more than the 5.6% forecast and Retail Sales jumped 8.7% versus an 8.3% forecast.

Japan’s Exports Fell in March

Japan’s exports shrank for a fourth straight month in March as weakness in global demand continues to weigh on the economy. The value of exports to the U.S. rose for a sixth month, by 4.4 percent, generating a bilateral surplus of 683.6 billion yen ($6.1 billion) in March, according to the finance in Tokyo. Sales to China slumped, driving a 2.4 percent drop in total exports.

Daily Forecast

Despite the somewhat bullish news for the USD/JPY, the price action is being muted by the light pre-holiday trade. However, if investors turn bullish later in the session then they are likely to use the former top at 112.137 as a springboard for a surge to the upside.

The daily chart indicates there is plenty of room to the upside to rally with the next major target coming in at 113.710. All it is going to take is further strength in the U.S. economy to drive prices into this level because the Japanese economy is going nowhere at this time.

If enough buyers fail to show up to drive the USD/JPY through 112.137 then we could be looking at a short-term pullback. This isn’t like to indicate a potential change in trend, but rather a reflection of the light pre-holiday trade.

Later in the U.S. today, investors will get the opportunity to react to reports on Trade Balance, Final Wholesale Inventories, and the Fed Beige Book.

Overall, the bias in prices is: Sideways

By the way, prices are vulnerable to a correction towards 111.02.

The projected upper bound is: 113.07.

The projected lower bound is: 111.07.

The projected closing price is: 112.07.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 28 white candles and 21 black candles for a net of 7 white candles.

A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 92.3482. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 6 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 61.46. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 73 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 116.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 7 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 11 period(s) ago.

Rex Takasugi – TD Profile

FOREX JPY= closed up 0.040 at 112.030. Volume was 54% below average (consolidating) and Bollinger Bands were 11% narrower than normal.

Open High Low Close Volume___
112.010 112.160 111.910 112.030 43,798

Technical Outlook
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish

Moving Averages: 10-period 50-period 200-period
Close: 111.67 111.08 111.51
Volatility: 5 6 7
Volume: 78,905 91,228 102,956

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

FOREX JPY= is currently 0.5% above its 200-period moving average and is in an upward trend. Volatility is low as compared to the average volatility over the last 10 periods. Our volume indicators reflect moderate flows of volume into JPY= (mildly bullish). Our trend forecasting oscillators are currently bullish on JPY= and have had this outlook for the last 4 periods. The security price has set a new 14-period high while our momentum oscillator has not. This is a bearish divergence.

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