Yen Gains Traction Following Robust PMI


USD/JPY dropped to a six-week low at 122.81, reflecting the haven draw of the Japanese currency as most other Asian currencies saw news lows against the dollar as turmoil continued in Asia. A drop in China’s Caixin manufacturing PMI to a six-year low of 47.1 in the prelim reading for August, down from a from 47.8 in July, fed concerns about China’s economic prospects. Beijing remained quiet, and equities dove once again, with the Shanghai Composite showing a 4.3% loss in Friday’s trading session. A rise in Japan’s PMI to 51.9 in August from 51.2 had little impact.

Japanese manufacturing activity expanded in August at the fastest pace in seven months. The Markit/Nikkei Japan Flash Manufacturing Purchasing Managers Index rose to 51.9 in August from a final 51.2 in July. The index remained above the 50 threshold that separates expansion from contraction for the fourth straight month. The index for new orders rose to a preliminary 53.2 from a final 50.9 in the previous month, also indicating the fastest growth in seven months.

The USD/JPY currency pair tumbled through trend line support and is poised to test new support levels at 122.40. Resistance is seen near the 10-day moving average at 124.17. Momentum has turned negative with the MACD (moving average convergence divergence) index generating a sell signal. This occurs as the spread (the 12-day moving average minus the 26-day moving average) crosses below the 9-day moving average of the spread.

The post Yen Gains Traction Following Robust PMI appeared first on Forex Circles.

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