Global macro overview for 10/08/2017

Global macro overview for 10/08/2017:

A mixed set of Japanese economic data disappointed the global investors. The Core Machinery Orders decreased 1.9% on monthly basis, while the market participants expected a 3.7% increase after -3.4% fall a month ago. Moreover, Tertiary Industry Activity did not increase as much as anticipated (0.0% vs. 0.2%, -0.1% prior).

The data are shedding some doubt on what had looked to be a developing domestic demand pick up. But this was partly offset by some stronger PPI data. The Producer Price Index increased 2.6% on yearly basis, while the market participants expected 2.4% increase, after 2.2% figure a month ago. Nevertheless, none of this set of data is a real game-changer as the Bank of Japan will likely keep its wait-and-see approach and will keep monitoring the economic developments. This one-off miss in the overall mini up trend of the domestic economic recovery pace and will not likely change the BoJ monetary stance: it will still remain highly accommodative. In the result, the Japanese Yen will still be sought after across the board, especially if the US - North Korea conflict escalate more as the Yen is still being perceived as safe-heaven currency.

Let's now take a look at the USD/JPY technical picture at the H4 timeframe. The price is slowly approaching the long-term support at the level of 108.79. Recently the market has failed to break out above the 61%Fibo at the level of 110.97 and reversed to continue to down trend. The current market conditions look oversold, but the chance for another leg down is still high as the momentum indicator remains below fifty level.


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