US Data during the 9/4 session continued to support the case for an earlier rate hike by the FOMC. The expectation has been anchored around mid-2015. After terrible Q1 data, expectation pushed back, but since Q2, data have provided grounds to raise rates before mid-year.
9/4 US Data:
We saw trade deficit narrowed slightly from -40.8B in June to -40.5B in July. Jobless claims had a 302K print for the most recent week, staying around 300K, and reflecting a trend that has been declining since 2010 – which is a good thing. ISM Services PMI improved to 59.6 in August after a 58.7 reading in July.
This is nothing eye-popping, but with the BoJ staying course, USD/JPY rallied above the previous 2014-high, officially making it a bullish year after about half a year of consolidation.
The daily chart shows us that the pair was consolidating until the bullish attempt in mid-July that is still extending. The consolidation was a descending triangle, and the July-August price action confirmed the breakout. Then during the end of the 9/4 session, and beginning of the 9/5 session, price made a fresh high on the year.
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When you jump to the monthly chart, you actually see price testing a key resistance factor – a falling trendline from the 1998 high of 147.66. Perhaps a break above 106 will be needed to show a break above this line. Then the next key resistance might be up at 110.65, which is a key resistance pivot in 2008. USD/JPY definitely looks like it is developing a long-term bullish attempt with such an aggressive rally since 2012.
Even though we might see overbought conditions in many time-frames, we should limit our bearish outlook to the short-term, and at most the medium-term, with the anticipation that buyers will be buying on the dip with a long-term bullish outlook brewing.
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