Forex EUR/USD USD/JPY GBP/USD USD/CHF USD/CAD AUD/USD NZD/USD EUR/GBP EUR/JPY

JAPAN HEADING TOWARDS A RECESSION

Yesterday, unexpected official reports showed that Japan, the third largest economy in the world, is heading towards a recession.These reports revealed that the Japanese Gross Domestic Product (GDP) contracted by an annualized 1.6% in the 3rd quarter following a 7.3% drop in the preceding quarter, which led the country into recession.

The EUR/USD dropped sharply last night, since, due to the shocking Japanese news, investors started buying the USD as a safe-haven, as concerns grew regarding the possible deterioration of the global economy.

Recent events might push the EUR/USD towards a new bearish condition; supporting the previous downward trend; and last week’s low of 1.2354 might be revisited.

Below are the major Resistance (R) & Support (S) levels of the EUR/USD:

 

S2

 
S1

 
Pivot Point

 
R1

 
R2

 
1.2354

 
1.2408

 
1.2475

 
1.2610

 
1.2670

 

 

As for today’s figures, starting with the UK, the Consumer Price Index (CPI) will be released, measuring the change in the price of goods and services from the perspective of the consumer. It is a key indicator to measure changes in purchasing trends and inflation.

  • Forecast: 1.2% 
  • Previous: 1.2% 

A higher than expected reading should be taken as positive for the GBP, while a lower than expected reading should be taken as negative for the GBP.

Moving to Germany, the German (ZEW) Economic Sentiment Index is scheduled for release; gauging the six-month economic outlook. A level above zero indicates optimism; while a level below zero indicates pessimism. The reading is compiled from a survey of about 350 German institutional investors and analysts.

  • Forecast: 0.9 
  • Previous: -3.6 

A higher than expected reading should be taken as positive for the EUR, while a lower than expected reading should be taken as negative for the EUR.

As for the U.S., the Producer Price Index (PPI) will be released today; measuring the change in the price of goods sold by manufacturers. It is a leading indicator of consumer price inflation, which accounts for the majority of the overall inflation.

  • Forecast: -0.1% 
  • Previous: -0.1% 

A higher than expected reading should be taken as positive for the USD, while a lower than expected reading should be taken as negative for the USD.

The Treasury International Capital (TIC) Net Long-Term Transactions report is also scheduled for release; measuring the difference in value between foreign long-term securities purchased by U.S. citizens and U.S. long-term securities purchased by foreign investors. Demand for domestic securities and currency demand are directly linked since foreigners must buy the domestic currency to purchase the nation’s securities.

  • Forecast: 41.3 B 
  • Previous: 52.1 B  

A higher than expected reading should be taken as positive for the USD, while a lower than expected reading should be taken as negative for the USD.

As for the energy market, the American Petroleum Institute will report, at 21:30 GMT, the inventory levels of the US crude oil, gasoline and distillates stocks. The report shows how much oil and products are available in storage. This gives an overview of the US petroleum demand.                     

We wish you luck in your trading activities. For any further assistance, please do not hesitate to contact us at [email protected]

Disclaimer

The prices and news mentioned in this outlook are absolutely no guarantee of future market performance. Financial markets can move in either direction causing profits to be made or complete losses to be incurred by the trader. Each trader must decide for themselves what their risk appetite is and ensure that correct risk management procedures are in place before placing any trades.

Engaging in CFDs or Spot FX carries a high risk to your capital. You should not engage in this form of investing unless you understand the nature of the Transaction you are entering into and the true extent of your exposure to the risk of loss. Your profit and loss will vary according to the extent of the fluctuations in the price of the underlying markets on which the trade is based.

Avatar
Rate this post
Total: 0 Average: 0

Investing is speculative. When investing your capital is at risk. This site is not intended for use in jurisdictions in which the trading or investments described are prohibited and should only be used by such persons and in such ways as are legally permitted. Your investment may not qualify for investor protection in your country or state of residence, so please conduct your own due diligence. This website is free for you to use but we may receive commission from the companies we feature on this site. Click here for more information.