GROWTHACES.COM Trading Positions:
- AUD/USD: long at 0.9305, target 0.9470, stop-loss 0.9230
- USD/CAD: long at 1.0850, target 1.1000, stop-loss 1.0810
- USD/JPY: long at 104.90, target 107.50, stop-loss 104.30
ECONOMIC CALENDAR
USD/JPY: Disappointing revision of Japan's Q2 GDP growth.
- Japan's economy shrank an annualised 7.1% in April-June from the previous quarter, revised down from a preliminary 6.8% contraction due to weaker-than-expected capital spending and a deeper decline in consumer spending. The reading was weaker than the median forecast of 7.0%. The weakness in capital expenditure is against the BOJ's expectations that companies, which saw revenues rise thanks to the stimulus policies, will boost investment and hiring.
- The structure of GDP revision was disappointing. Nonresidential investment was revised from a 2.5% fall to a 5.1% fall. The only positive revision was higher contribution to output from inventories (1.4 pp. instead of the initially estimated 1.0 pp.)
- In its latest forecast issued in July, the BOJ expects the economy to expand 1.0% in the current fiscal year. The bank is likely to cut that projection at its next review its long-term projections in late October.
- Japan's service sector sentiment index released by the Cabinet Office fell to 47.4 in August from 51.3 in July, down for the first time in four months. The outlook index, indicating the level of confidence in future conditions, was down at 50.4 from 51.5 in July.The outlook worsened for the third time in a row last month.
- Japan’s current account recorded a surplus of JPY 416.7 bn, compared with the median forecast of JPY 444.2 bn. The current account surplus is likely widen further in coming months. Imports may recover only slowly, as domestic demand is sluggish and low crude oil prices reduce cost of energy imports. The exports is likely to be supported by weaker JPY.
- The medium-term scope for the USD/JPY remains on the upside. The nearest resistance is 105.71 – a new 2014 peak posted last week. A break above that level will open the way for further gains. In line with our trading idea we went long on the USD/JPY at 104.90 with the target of 107.50 in the medium term. Our stop-loss is at the level of 104.30.
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Significant technical analysis' levels:
Resistance: 105.71 (high Sep 5),106.00 (psychological level), 106.15 (high Oct 3, 2008)
Support: 104.68 (low Sep 5), 104.56 (10-dma), 104.30 (low Sep 2)
GBP/USD dropped on Scottish fears.
- Supporters of Scottish independence from Britain have taken their first opinion poll lead since the referendum campaign began. A YouGov survey for the Sunday Times newspaper put the "Yes" to independence campaign at 51% against the "no" camp at 49%.
- YouGov said that the results excluded those who would not vote and those who did not plan to vote or did not know how they would vote. With those groups included, secessionists would be on 47 percent and those championing the United Kingdom would be on 45 percent, it added.
- British Prime Minister David Cameron said the government was not making contingency plans for the possibility that Scots will vote for independence on September 18.
- The GBP/USD fell to its 10-months low at 1.6104 today. The outlook remains negative. A strong support level is 50% of the July 2013-June 2014 rally (1.4814-1.17192).
Significant technical analysis' levels:
Resistance: 1.6270 (hourly high Sep 8), 1.6340 (high Sep 5),1.6358 (recovery high Sep 4)
Support: 1.6060 (low, Nov 19), 1.6003 (50% of 1.4814-1.7192), 1.5988 (low, Nov 14)