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USD/JPY binary signal - U.S. GDP Report - 28 April 2017

Signal details
Entry Price: 
111.15
Close Price: 
111.44
Direction: 
High
Expiry Time: 
20:00 GMT
Result: 
ITM
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The U.S. Department of Commerce will be releasing the advance or preliminary GDP report for the first quarter ending March today. Economists surveyed have forecast that the U.S. economy expanded at a pace of 1.3% in the first quarter. This is significantly lower from the fourth quarter of 2016 where growth was registered at 2.1% but was slower than the pace of growth registered in the third quarter of 2016.

The implications of a weaker pace of economic expansion means that next week's FOMC meeting could see a somewhat dovish response from the Fed on interest rates. This comes after the weak payrolls report that was registered in the month of March. The weak pace of economic activity comes with a mix of factors that include weaker consumer spending and lower inventories.

The U.S. department of commerce had previously revised lower the retail trade data which contributed to further downside expectations in the first quarter GDP. With the expectations of a weak pace of GDP growth the prospects of the downside weakness in the U.S. dollar is strongly priced in. This would potentially mean that a surprise increase in the GDP could bring some volatility to the markets today.

The Japanese yen has been trading rather mixed with yesterday's price action mostly muted. This was despite the Bank of Japan's monetary policy meeting that was held earlier in the day. The BoJ did not make any changes to interest rates or to the QQE purchases but instead maintained that it would continue its efforts to reach the inflation target. The BoJ expects to hit 2% inflation in April 2018, but it lowered the inflation forecasts for the year.

USDJPY has formed an inside bar in yesterday's trading session and the price action is indicative of a possible break out led trade in the near term. The bias is to the upside as we expect to see USDJPY continue to push higher. Therefore, today's binary trading signal is to purchase CALL options at 111.150 for a 20:00 GMT expiry time.

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.