Global macro overview for 20/05/2016:
The core machinery orders data from Japan has been released overnight and it has surprised investors. Core orders, a leading indicator of business investment, surged 5.5% from the previous month, stronger than a 0.7% increase expected by economists. Moreover, on an annual basis, core orders surged 3.2%, much more than 0.8% expected by market participants. Despite the good figures, the firms predict orders to drop in the current quarter as companies become increasingly cautious due to a surging Japanese yen and weakness in overseas economies. The Prime Minister Shinzo Abe urges firms to spend more for future growth in order to return to the levels seen prior to the global financial crisis.
Let us now take a look at the USD/JPY technical picture on the daily time frame. Bulls have managed to retrace the recent fall up to the nearest technical resistance at the level of 110.62, but bears are still in control over this market. The golden trend line might provide another dynamic resistance around this area, so a failure and a return to the downtrend are expected here.
