Mid-Day Report: Yen Sold off again after US Durables

Market Overview | Written by ActionForex.com | Jul 25 08 13:12 GMT |

US Jun durable goods orders came in much stronger than expected. Headline orders rose for the second consecutive months by 0.8% versus expectation of -0.3% fall. Ex-transport orders is even more impressive, rising strongly by 2.0%, largest monthly increase since last Dec, versus expectation of -0.2% fall. The Japanese yen reversed earlier gains this week and is sold off sharply across the board as investors' sentiment flipped to positive again. Technically speaking, in spite of earlier pull back, recent rise is yen crosses remains intact. Even though GBP/JPY retreated sharply before, it's still being contained by mentioned 211.53 near term support. More upside is now expected in yen cross to retreat this week's high. Dollar recovers mildly but remains bounded in range against major currencies. U of Michigan consumer sentiment final reading and new home sales will be featured next. (Quick update: Dollar rises further against yen after U of Michgan sentiments revised sharply higher to 61.2. New home sales dropped -0.6% to 530k, above exp 504k) Sterling recovers strong today after Q2 GDP came in as expected by 0.2% qoq, 1.6% yoy. Germany import price climbed 1.5% mom, 8.9% yoy in Jun. Eurozone M3 monthly supply growth slowed sharply to 9.5% yoy, below expectation of 10.3%. Japan national CPI beat expectation and climbed 2.0% yoy in Jun. Corporate Service Price Index rose 1.2%, much stronger than expectation of 0.6%. GBP/JPY Mid-Day Outlook Daily Pivots: (S1) 212.05; (P) 213.93; (R1) 215.10; More GBP/JPY's retreat from 215.87, though steep, was contained by mentioned 211.53 support as expected and rebounds strongly in early US session. Break of 213.46 minor support indicates that fall from 215.87 has completed and flip intraday back to the upside. Further rise is now expected to be seen to 100% projection of 192.60 to 208.99 from 199.78 at 216.17 first. On the downside, while the consolidation from 215.87 might extend further, downside is still expected to be contained by 211.53 support and bring rally resumption. In the bigger picture, a medium term bottom is in place at 192.60. Rebound from there is confirmed to have resumed after GBP/JPY takes out 213.91 resistance. Further rally should now be seen to 61.8% retracement of 241.35 to 192.60 at 222.75. On the downside, though, break of 207.98 will now be an important alert that rebound from 192.60 has completed and put focus back to 199.78 support in such case.

Economic Indicators Update

GMT	Ccy	Events	Actual	Consensus	Previous	Revised
23:30	JPY	Japan National CPI Y/Y Jun	2.00%	1.90%	1.50%
23:30	JPY	Japan Tokyo CPI Y/Y Jul	1.60%	1.60%	1.30%
23:50	JPY	Japan CSPI Jun	1.20%	0.60%	0.50%	0.70%
08:00	EUR	Eurozone M3 Y/Y Jun	9.50%	10.30%	10.50%	10.00%
08:00	EUR	Eurozone M3 3mth Jun	9.90%	10.40%	10.40%
08:30	GBP	U.K. GDP Q/Q Q2	0.20%	0.20%	0.30%
08:30	GBP	U.K. GDP Y/Y Q2	1.60%	1.60%	2.30%
12:30	USD	U.S. Durable goods Jun	0.80%	0.20%	0.00%	0.10%
12:30	USD	ex. Transport Jun	2.00%	-0.20%	-0.80%	-0.50%
13:55	USD	U.S. U. Michigan survey Final Jul	61.2	56.4	56.4
14:00	USD	U.S. New home sales Jun	530k	503K	512K	533k
14:00	USD	U.S. New home sales M/M Jun	-0.6%	-1.80%	-2.00%	-1.7%