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USD/JPY Trading - Trade balance, Non-farm productivity - 06 Dec 2016

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USD/JPY Trading chart 06 Dec 2016
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Second tier economic data from the U.S. due for release: Trade balance, non-farm productivity and factory orders

Economic data from the U.S. today will be focusing on details such as the trade balance, non-farm productivity and factory orders. Although the reports are unlikely to move the U.S. dollar much, it could offer some glimpse into the quarterly growth data. Estimates point to the trade balance to widen to 41.5 billion in October from 36.4 billion previously which had narrowed. The basis for the widening trade balance is based on falling exports of goods and services which are expected to fall 1.7% on a month over month basis in October, which comes after nearly four months of increase.

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The third quarter non-farm productivity data, which is measured as non-farm business output per hour is slated to be increased higher to 3.2% on a quarterly basis, up from the initial estimates of 3.1%.

In the second GDP estimates, the U.S. gross domestic product was increased from 2.9% to 3.2%. USDJPY, which has been showing signs of stalling near the resistance level of 114.0 could eventually set the near term direction for the currency pair with the bias equally balanced.

USDJPY was bullish yesterday, coming after two consecutive days of declines after price stone walled into the resistance zone of 114.00 - 114.50. Prices reversed off the 114.439 but not before posting a modest lower high near this resistance. Support is seen at 113.30 which has managed to hold out so far, and thus setting a range of 114.50 – 113.30.

A break out from either of these two levels will signal continuation in the near term.

How to trade binary

USDJPY, while trading within the range of 114.50 and 113.30 could be looking poised for a break down to the downside. Prices are currently supported by the rising trend line on the 60-minute chart. A break below this trend line could see USDJPY fall to 113.30 with a break down below this level likely to signal further near term declines.

With the Stochastics also showing a bearish divergence, USDJPY daily PUTs are ideal on an hourly close below 113.80 and the minor rising trend line.

While USDJPY could see a short term bounce off the main support at 113.30, this could result in a lower high being formed. With the dollar posting strong gains and having little to no pullbacks to this uptrend, USDJPY remains at risk for a correction lower.

Asset: USD/JPY
Direction: Put
Target price: 113.80
Expiry: 21:00 GMT

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