USD/JPY Flirts With Critical Level
USD/JPY stormed ahead once again on Wednesday before it finally ran into resistance. The late-day high was 124.07, just shy of the 2007 top at 124.14. A break above that would be the best level for the pair since 2002.
Initially at least, that level proved to be solid resistance and some profit-taking pushed the pair back to 123.69. At such a critical long-term level, unless there is a resounding rejection in the next day or two, it points to a break. One space to watch closely is the G7 finance ministers meeting in Germany. If Japanese leaders signal that they don't want further yen weakness, the trade could turn around.
Overall, it was another day of broad gains for the US dollar. In European trading, it looked as though the dollar may sag and consolidate the gains of the past week but instead, it continued to power higher. One exception was against the euro after chatter from Greece that a deal with creditors was close.
Early in Asia, more headlines indicated the sides were nearing agreement and when there is smoke, there is probably fire. But after 6 years of Greek drama, we've learned to never trust a headline and be prepared for anything.
Due up later, it's Japanese retail sales for April at 2350 GMT. The consensus is for a healthy 5.4% y/y raise as we finally get past the skew from the consumption tax increase.Afterwards, at 0130 GMT, it's the Australian Q1 capex report. The Q42014 report showed a 2.2% fall compared to 1.6% expected and that marked the top in AUD/USD for the next month. This report is expected to show a further 2.4% q/q decline.
|Retail Trade s.a (APR) (m/m)|
|-1.9%||May 27 23:50|
|Retail Trade (APR) (y/y)|
|5.4%||-9.7%||May 27 23:50|
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