Global macro overview for 26/06/2017:
Today the US will release the Durable Goods Orders data at 12:30 PM GMT and market participants are expecting orders to decrease from 0.7% to 0.5% in May, marking the second straight monthly slide. The orders measured on the yearly basis are expected to remain moderately positive, posting a 4% increase. Manufacturing productivity in the US has been slowing in the recent months and today it is expected to resume a decline. Moreover, the sentiment data in the manufacturing sector has been weakening as well as the manufacturing PMI decreased to the eight-month low. However, the reading was still pretty solid at the level of 52.7, which is above the fifty level that separates expansion from contraction. The possible reason behind a slowdown in the manufacturing industry is a retail sales decrease, which may limit the growth of the employment as firms are forced to scale back hiring.
It is still too early to conclude, whether this decrease in manufacturing activity is just a seasonal factor, a noise or a start of something more worrying. There is still a chance for the US manufacturing output to increase later this year and the chance lies in the reforms pledged by Trump during the presidential campaign. He promised to increase the manufacturing output by opening more factories in the US than overseas, despite higher work costs. The results have been quite dissapointing so far, so perhaps this might be a reason why the manufacturing sector starts to struggle.
Let's now take a look at the USD/JPY technical picture on the H4 timeframe. The market still trades below the 50%Fibo at the level of 111.57 and above the 38%Fibo at the level of 110.92. In case of a bullish breakout, the next technical resistance is seen at the level of 111.76 and in case of a bearish breakout, the next support lies at the level of 110.81.
