Don’t get puzzled with USD/JPY bear swings despite healthy U.S. GDP, trade balance - further crash speculative

We could foresee lot of speculations happening around USDJPY currency cross.

Despite the preliminary Q/Q GDP in U.S. posted upbeat numbers at 2.1% which is an increase from previous 1.5% and trade deficit has been contracted from previous 59.1B to 58.4B, dollar has been adversely reacting to these fundamental indicators.

This lackluster move is confirmed by the sluggish consumer confidence numbers (reported at 90.4 versus previous 99.1).

All these developments can be coupled with driving force to next month's rate hike decision.

Today's data highlights: We forecast unemployment claims to increase higher to 273K from previous 271K which is another weaker sign for dollar in near term.

While consumer durable orders, service PMI, new home sales and crude inventories are in the focus for today which may add additional impetus for dollar's direction on either side.

According to the minutes of the last BoJ meeting the risks for the economy and inflation are pointing downwards at present.

The mixed bag of economic numbers would mean that market sentiments speculators of this pair has been puzzling.

We don't believe that there would be extreme bearish environment revolved around dollar, Dollar index (DXY) approaching the psychological barrier of 100.0 may also weigh. What is smart trade idea is that, instead of having long term bearish stance, the prevailing downswings could be utilized for expensive call writings.