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USD/JPY Trading - Merchandise Trade - 25 Jan 2017

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USD/JPY Trading chart 25 Jan 2017
Average: 5 (4 votes)

Japan merchandise trade surplus beats estimates

Official data released earlier today showed that Japan had a merchandize trade surplus of 641.43 billion yen for the month of December. The headline figure beat expectations of 281.1 billion yen, but the data saw a downward revision in November from 152.5 billion yen to 150.8 billion.

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Exports increased 5.4% on the year topping forecasts of 1.1% and reversing the declines of 0.4% previously

Japan's exports to Asia and China increased 12% and 12.5% respectively while exports to the U.S. rose 1.3%, after falling 4% in November. Imports however declined at a pace of 2.6% extending the declines from November's 8.8%. Imports from Asia and China were down 5% respectively while imports from the U.S. jumped 9.6% on the year.

The U.S. dollar, although attempting to post some gains, remains trading below 113.50 area as investors appear reluctant to test the upside on fears of potential jawboning from president Trump on a stronger U.S. dollar. Speculation is already rife that the U.S. will push for an "irrationally stronger yen" which has benefited so far from a stronger U.S. dollar keeping the Japanese yen competitive enough for the export and manufacturing companies in Japan.

How to trade binary

USDJPY has formed a minor double bottom pattern near 112.62 - 112.70. However, for price action to post any strong gains, 114.00 is a key resistance level that needs to be breached to make any significant gains to the upside. There is a minor support to the downside at 112.16.

Therefore, purchase daily CALL options at 112.16 for a 21:00 GMT expiry time. We expect USDJPY to post a reversal near 112.16 support level before price action will continue to push higher based on the longer term’s double bottom pattern that was formed.

Asset: USD/JPY
Direction: Call
Target price: 112.16
Expiry: 21:00 GMT

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