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USD/JPY binary signal - U.S. Building permits - 19 Jun 2018

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The economic calendar continues to remain light with the main events standing out that includes the ECB president Draghi's speech. The U.S. trading session will see the release of the building permits data.

According to the economists polled, the U.S. building permits are forecast to rise 1.35 million on the month in May 2018. This marks a slight decline from 1.36 million in building permits that were issued the month before.

The data is likely to shed light on the housing markets which reflects the overall state of the U.S. economy. In March, building permits were seen to rise at a pace of 1.8%. On an annual basis, building permits were seen rising 7.7% compared to the same period the year before.

The building permits data comes as the U.S. Federal Reserve continues to hike interest rates. Last week, the Fed held its monetary policy meeting where it hiked the short term fed funds rates by 25 basis points. This brought the U.S. short term interest rates to 1.75% - 2.0%.

The central bank also signaled that it would hike rates two more times this year. This was more than the previous forecasts which showed just three rates hike from the December 2017 monetary policy meeting.

Higher interest rates are expected to hit the housing market as the cost of mortgage increases. However, with wage growth showing a steady increase and the U.S. labor market showing signs of strength, U.S. consumers are expected to weather the higher interest rate cycle.

Based on the above, today's trading signal is USDJPY. The currency pair was seen easing strongly mostly on account of a waning risk appetite which put the Japanese yen on a stronger footing. Still, with price action approaching the key support level we expect to see a rebound in price action.

With the USDJPY trading in the intraday support 109.75 level, we expect to see some further drops before the currency pair eventually close higher on the day.

usdjpy signal 19 jun 2018

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. 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. All risks and coasts associated with online trading are your responsibility.