Global macro overview for 25/08/2017

Global macro overview for 25/08/2017:

Other signs of inflationary pressures were revealed in the recent data. Japanese National CPI data were released at the level of 0.4%, unchanged from a month ago, but CPI minus fresh food – a key proxy for core inflation – increased from 0.4% to 0.5% in the reported month. The reading matched a median estimate of economists and marked the seventh consecutive monthly increase for the core price index. The biggest jump in inflation was noted in Tokyo, where core inflation, a leading measure of nationwide price trends, climbed 0.4%. Core prices in the capital city climbed 0.2% in June.

Despite the fact that the inflationary pressures in Japan are increasing, the inflation is still well below the Bank of Japan official target of 2.0%. According to the latest BoJ statements, as long as the target is not achieved, the BoJ monetary policy will remain highly accommodative (monetary easing will remain the norm for the foreseeable future). This decision was made even after the good data from the Japanese economy had been delivered throughout the whole 2017 ( better than expected GDP, low unemployment, etc ). Japan's run of six straight quarters of growth marks the longest expansion since 2006.

Let's now take a look at the USD/JPY technical picture at the H4 time frame. After rejection at the level of 111.00, the market slid towards the technical support at the level of 108.79 and tested it three times already. Nevertheless, no new lower close was made and so far the market is trading in a narrow range between the levels of 109.84 - 108.59.

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