USD/JPY

China’s August PMI Manufacturing came in slightly better than expected at 51.7 versus the estimate at 51.5 and the prior reading at 51.2. This report continues to paint a growth picture out of China (although the indicator is trending lower) with the USD/JPY receiving the best bid off of the release. On a very short-term outlook we see the pair approaching the 15-200min mavg and 38.2% retracement of this week’s move, where the pair could find some sellers.

The Yen has weakened to open the trading week as the Chief Cabinet Secretary Sengoku is indicating that Finance Minister Kan and the BOJ’s Shirakawa will meet this afternoon to discuss the state of the economy, after which Kan will decide on a stimulus outline. It seems the market is interpreting this as additional easing is in the pipline, particularly with the strong performance of the Yen recently making things more difficult in Japan. On a 4-hr chart it seems the USD/JPY pair has broken the channel below to the upside and could test the 4-200hr moving average in the near-term. Above that indicator it seems that resistance is abundant, however at these depreciated levels the pair could move higher as easily as it did lower.  

USDJPY showing some bullish clues. Holding 84.80 is needed. A move to 85.36-46 is the next target above.