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USD/JPY binary signal - Richmond Fed Manufacturing - 22 May 2018

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Signal details
Entry Price: 
111.02
Close Price: 
110.89
Direction: 
Low
Expiry Time: 
21:00 GMT
Result: 
ITM
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The economic calendar is quiet once again with only some sparse data scheduled over the day. Of importance will be the data from the United States. The Richmond Fed manufacturing index report will be released at 14:00 GMT today.

The Richmond Fed manufacturing index covers the regional manufacturing activity for the period of May. This forward looking indicator reflects the state of the manufacturing activity and feeds into the monthly ISM's manufacturing report data.

Economists' polled forecast that manufacturing activity might have increased in the region in the month of May. The estimates show that the Richmond Fed manufacturing index rose to 9 in May compared to a decline to -3 the month before.

The hawkish expectations come on the back of the fact that recent other manufacturing reports from other regions showed a strong rebound in activity.

The U.S. manufacturing sector continues to remain a strong contributor to the economy's GDP. As a result, an increase in manufacturing activity could potentially keep the USD on the front foot. Just a week ago, the Empire State Manufacturing index, which covers the manufacturing activity from New York, showed that regional manufacturing activity advanced to 20.1 on the index.

This beat estimates that expected to see a decline to 15.1 on the index following a 15.8 reading the month before. Similarly, the Philly Fed manufacturing index rose to 34.4 beating estimates of 21.1 and accelerated from April's reading of 23.2.

Based on the above, today's binary trading signal is USDJPY. The currency pair stalled the gains as price action hit the resistance level. With the strong rally showing no pullbacks, we expect USDJPY to post a much needed correction.

Therefore, it is ideal to purchase daily PUT options at 111.02 for a 21:00 GMT expiry time. We expect the USDJPY to retrace slightly back to the level mentioned to close lower on the day.

Disclaimer: The article is written for informative purposes only and it is not financial advice. The author does not have any position in the currency pairs mentioned, and no plans to initiate a position. He wrote the article himself and expressed his own opinions. He has no business nor personal relationships with any mentioned government entities or stocks. Readers should not treat any opinion expressed by the author as a specific inducement to make a particular trade or follow a particular strategy, but only as an expression of his opinion.