Today at 12.30pm GMT, the US Core Durable Goods Orders report will be released. It is a report which measures the change in the total value of new purchase orders that manufacturers receive for durable goods, not including transportation items.
The consensus by market analysts is for a monthly improvement in this indicator to have occurred, with the figure likely to come in at 0.2%. This would be an improvement on the July figure of -0.4%.
This economic indicator has become more important in the last 6 months in the face of the ongoing US-China trade war. The US is also trying to get a trade deal with Japan, one of its largest trading partners.
The report will therefore provide some insight on the state of manufacturing of durable goods (minus transportation related items) in the US and the impact on the US economy. The USDJPY is therefore a good pair with which to trade this news release.
The Personal spending report is also expected at the same time, with a consensus figure of 0.3%.
Trade Outlook for USDJPY
The US Core Durable Goods Orders data will be released along with the monthly Personal Spending figures. This means that two high impact data will be out at the same time.
Traders should look to trade the report that has a larger deviation from the consensus numbers in case of conflict. A conflict occurs when one report show a higher-than-expected outcome while the other comes in lower than expected.
Forthe US Core Durable Goods Orders, the difference between the previous and consensus figure is 0.6%. Therefore, if the US Core Durable Goods figure comes in at 0.8% or more, this would be a USDJPY buying opportunity. If the figure is negative, this would be a selling opportunity on the USDJPY.
If the Personal Spending figure is 0.6% or more, this would be good for the USD and would present a buying opportunity on the USDJPY. If the figure comes in at 0% or less, this would be a USDJPY selling opportunity.
Watch out for conflict of figures. Watch to see which has a bigger deviation in case of conflict. If both data point in one or the other direction, then we would need lesser deviation numbers than indicated above to produce buying or selling opportunities.
The technical levels for the USDJPY are shown in the chart. Price ticked lower during the week after finding resistance at the 50% Fibonacci level, drawn from the swing high of April 24 to the swing low of August 26.
Price is now rising to meet this level once more after a strong performance by the US Dollar this week, backed up mostly by positive statements from both sides of the US-China trade divide. Higher lows and lower highs are connected by trendlines to form an evolving symmetrical triangle.
Strong news numbers could break the boundaries of this triangle, and target any of the identified upside/downside targets, depending on where the news figures point to.