It’s Jackson Hole day, errbody!
With all eyes on the U.S. dollar, we think we can explore a possible resistance zone for USD/JPY.
Before moving on, ICYMI, yesterday’s watchlist looked at EUR/NZD’s Fibonacci pullback levels ahead of the Jackson Hole speeches. Be sure to check out if it’s still a good play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
Canada flash manufacturing sales for July: 0.7% m/m
Federal Reserve Bank of Boston President Susan Collins sees further hikes may be necessary
Federal Reserve Bank of Philadelphia President Harker sees interest rates at restrictive levels
U.S. weekly initial jobless claims for week ending Aug. 18th: 230k (242k forecast; 240k previous)
U.S. Durable Goods Orders for July: -5.2% m/m (0.5% m/m forecast; 4.4% m/m previous ); core durable goods came in at 0.5% m/m (0.3% m/m forecast; 0.2% m/m previous)
Kansas Fed Manufacturing Index for August: 12.0 (-15.0 forecast; -20.0 previous)
Japan’s corporate services price index jumped from 1.4% to 1.7% y/y in July
Tokyo’s core CPI rose by 2.8% y/y in August (vs. 2.9% expected, 3.0% previous)
GfK: lower inflation helped boost U.K. consumer sentiment to -25 in August from a three-month low of -30 in July
Price Action News
Overlay of JPY Pairs 15-min
There were not a lot of top-tier economic releases in the past couple of hours, so it was easy for Asian and early London session traders to take cues from U.S. session themes.
JPY took a backseat as a safe haven in favor of the U.S. dollar early in the session. The yen soon gained ground, however, thanks to Tokyo’s core CPI coming in higher than the BOJ’s 2.0% target. It may have also helped that traders are taking profits from their long USD trades ahead of Powell’s Jackson Hole speech.
As of writing, JPY is maintaining its intraday gains against most of its major counterparts except for CAD, AUD, and USD.
German IfO business climate at 8:00 am GMT
Revised UoM consumer sentiment at 2:00 pm GMT
Fed Chairman Powell to give his Jackson Hole speech at 2:05 pm GMT
ECB President Lagarde to give a speech at 7:00 pm GMT
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USD/JPY 15-Minute Forex Chart by TV
USD/JPY has been making higher highs and higher lows since yesterday when the pair found support from the 144.50 area.
But USD/JPY has already hit the 146.25 levels today, which is 20-ish pips away from half of USD/JPY’s average daily volatility.
Will this mean that USD/JPY is headed lower? Or is the pair just taking a breather while traders wait for Fed Chairman Powell’s Jackson Hole speech?
Based on the Fed members’ speeches that we’ve seen this week, it sounds like at least some members are ready to be less hawkish in their biases.
We may get more deets from the Fed head honcho later today during his speech.
Clear hawkish statements and concrete rate hike parameters from Powell could push USD/JPY to the R1 (146.32) Pivot Point and previous resistance zone.
But if we don’t hear clear plans from the Fed, or if the bar is set pretty high for the next interest rates, then USD/JPY may extend its short-term downswing and revisit lower areas of interest.
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