GDP downward revision ignored
Dollar edges higher against Swissy and yen and recovers against Euro in early US session despite downward revision in Q2 GDP. In today’s final GDP estimates, Q2 growth was revised down from 2.9% to 2.7%. Price index remains steady at 3.3%. Meanwhile PCE and PCE core were revised from 4.1% and 2.9% to 4.0% and 2.7% respectively. Jobless claims also came slightly higher than expected at 316k.
Sterling remains under pressure across the board today as positions were unwounded on the back of FT- reported error in UK ONS inflation estimate that’s slashed export prices inflation from 3.8% to 0.6% and thus reducing estimate of overall inflation from 3.4% to 2.2%. GBP/USD falls to as low as 1.8746 while EUR/GBP rebounds strongly to 0.6722. GBP/JPY and GBP/CHF also dropped to 220.67 and 2.3380 respectively.
USD/JPY
Daily Pivots: (S1) 117.04; (P) 117.33; (R1) 117.77;
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USD/JPY continues to edge higher to 117.84 so far. As discussed before, upside momentum is seen diminishing as displayed in mild bearish divergence condition in hourly MACD and RSI. A short term top might be around the corner but still, bias remains on the upside as long as USD/JPY stays above 117.48 support and further rise towards 118.27 is still in favor. Below 117.33 will indicate USD/JPY has turned into consolidation with risk of pulling back towards 55 hours EMA (now at 117.27) but downside should be contained by 116.90 support and bring further rise towards 118.27 resistance. However, below 116.90 will argues that the whole rebound from 116.08 has completed and risk retest of this low or even further towards 115.57 support.
In the bigger picture, USD/JPY’s rise from 113.95 lost steam ahead of 118.88 resistance (78.6% retracement of 121.38 to 108.99 at 118.73) and multi year falling trend line (147.68 to 135.20 then to 121.38, now at 118.56 level). But since retreat from 118.27 is stilled contained above 115.57 support, USD/JPY may try to test this resistance zone again before deciding further medium term direction. However, a drop below 115.57 will put 113.39 cluster support (50% retracement of 108.99 to 117.87 at 113.43) into focus again.
Read full report (EUR/USD, GBP/USD, USD/CHF, USD/JPY) here.
Shing-Ip Tsui is the founder and CEO of
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