Japan's economy has grown better than expected.

The yen has slightly weakened. Despite Japan's GDP exceeding expectations, investors are speculating that the Bank of Japan may further raise interest rates later this year. Meanwhile, declining inflation figures in the United States may lead the Federal Reserve to cut interest rates soon. Additionally, the yen might experience fluctuations due to Prime Minister Fumio Kishida’s decision not to run for re-election as party leader in September.

Japan's services PMI stood at 53.7 in July, after contracting in June at 49.4, marking the sixth expansion of the services sector this year. The growth was driven by an increase in customer numbers, leading to a resurgence in new orders, which reached a three-month high. Employment rates also grew significantly, surpassing the long-term average. However, foreign orders contracted, marking the fastest decline since 2022. Production costs saw a sharp rise, mainly due to continuous increases in fuel prices and labor costs, prompting companies to pass these costs onto customers.

Household income in Japan surged by more than 5.7% year-on-year in July, as rising inflation forced companies to raise wages for the first time in two years. The financial and insurance sectors saw the highest wage increases.

Preliminary data indicate that Japan's GDP grew by 0.8% quarter-on-quarter in Q2 2024, surpassing market expectations of 0.5%. Private sector consumption remained the main driver of Japan's GDP growth, accounting for more than half of the domestic economy. Surveys showed that wages rose significantly compared to the previous quarter, aligning with forecasts of a recovery in corporate earnings, particularly in the automotive industry.

The yield on Japan's 10-year government bonds rose above 0.83% as investors responded to stronger-than-expected GDP growth figures. The data suggest that Japan's economy can continue to grow, albeit modestly, which supports the possibility of the Bank of Japan raising interest rates again. It is expected that the bank may raise rates twice more this year. The increase in wages also indicates that companies can still generate profits.

Techical analysis data (5H)

Resistance: 149.33, 149.55, 149.78

Source: Investing.com

Buy/Long 1: If the price touches support in the price range of 148.65 - 148.88 but cannot break the support at 148.88, you may set a TP at approximately 149.55 and SL at around 148.43 or according to your acceptable risk.

Buy/Long 2: If the price breaks the resistance in the price range of 149.33 - 149.55, you may set a TP at approximately 149.78 and SL at around 148.65 or according to your acceptable risk.

Sell/Short 1: If the price touches resistance in the price range of 149.33 - 149.55 but cannot break the resistance at 149.33, you may set a TP at approximately 148.65 and SL at around 149.78 or according to your acceptable risk.

Sell/Short 2: If the price breaks the support in the price range of 148.65 - 148.88, you may set a TP at approximately 148.43 and SL at around 149.55 or according to your acceptable risk.

Pivot point August 15, 2024 09:17 PM. GMT+7