Global macro overview for 10/10/2018

Overnight, Japan published the data on machine orders in September. The data (Japan machinery orders received from the private sector excluding volatile orders) beat the market participants expectations, in monthly terms, the increase was 6.8% instead of the expected decline of 3.9%. Year to year, orders grew by 12.6% with 1.8% forecasts.

The high value of orders is a good sign for capital expenditure. Japanese companies should stay strong this fiscal year, which was already suggested by the Bank of Japan report from last week. The trade war between the US and China remains a risk factor for forecasts, as it may lead to an indirect decline in Chinese purchases, which means that some Japanese producers may opt out of buying new equipment. Manufacturers are sensitive to the development of the global trade situation because a large part of the machines and parts are exported to China, which in turn produce ready-made goods for sale to the United States and other markets.

Let's now take a look at the USD/JPY technical picture at the H4 time frame. After the price has fallen out of the channel, it found the support at the level of 112.86 and now is bouncing from it. Nevertheless, the bounces are shallow and the bears are continuing to increase to pressure on bulls, so the price might drop even more towards the next technical support at the level of 112.40 - 112.50. Please notice, the market conditions ar enow oversold, but the momentum remains negative and weak, so the continuation of the move down is still in play.

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