The Philly Fed Manufacturing Index took a big dive, showing a significant slowdown in manufacturing. With the CB Leading Index and Existing Home Sales also falling short, USD/JPY is falling.
One of better performing US indicators of late, the Philly Fed Manufacturing Index, joined other weak indices. It was expected to tick up from 18.5 to 20.2 points, but dropped to only 3.9 points. This means a significant slowdown in growth. A negative score means contraction. This can lead to a weaker manufacturing PMI, leading to job losses in manufacturing.
Existing Home Sales were expected to rise from 5.09 million (revised from 5.10) to 5.21 million, but actually dropped to 5.05 million. The CB Leading Index, which is a broader indicator of the economy, fell by 0.3%. A rise of 0.2% was expected. Mortgage Delinquencies remained almost unchanged at 8.23%, very close to last month’s level of 8.25%.
The result is a drop of USD/JPY from 82.10 to 81.80 after the release. 82 is a line of resistance. The pair climbed and even topped this line prior to the publication of this bulk of data. It could not hold on.
Much earlier in the day, the pair climbed higher on a disappointing figure in Japan – according to the initial release of GDP, the economy contracted by 0.9%, significantly worse than a squeeze of 0.5% that was expected. Japan is technically in a recession, after contracting in Q4 as well.
Dollar/yen has some support at 81.33, followed by 80.40. Resistance is at 82, followed by 82.87. For more technical levels and upcoming events, see the USD/JPY forecast.
