USD/JPY Forecast Dec. 5-9

USD/JPY continued to post gains last week, as the pair touched its highest levels since February. USD/JPY closed the week at 113.30. There are nine events this week. Here is an outlook for the highlights of this week and an updated technical analysis for USD/JPY. 

In Japan, consumer spending numbers remain weak, as Household Spending and Retail Sales both posted declines. In the US, Preliminary GDP sparkled in Q3 with a gain of 3.2%, beating the estimate of 3.0%. Consumer Confidence data easily beat expectations. Employment numbers were mixed, as Nonfarm Payrolls met expectations, but wages declined.

USD/JPY graph with support and resistance lines on it. Click to enlarge:

1. Japanese Consumer Confidence: Monday, 5:00. Consumer Confidence continues to post weak readings, indicative of a pessimistic consumer. The October reading came in at 42.3, short of expectations. The estimate for November stands at 43.8 points.
2. Average Cash Earnings: Tuesday, 00:00. This indicator is correlated to consumer spending. The September release improved to 0.2%, matching the forecast. Another reading of 0.2% is expected in October.
3. Leading Indicators: Wednesday, 5:00. This minor indicator dropped to 100.5% in September, matching the forecast. The October reading is expected to improve to 101.6%.
4. Current Account: Wednesday, 23:50. Japan’s current account surplus dipped to 1.48 trillion September, well short of the forecast of JPY 1.98 trillion. The surplus is expected to widen to JPY 1.57 trillion in the October report.
5. Final GDP: Wednesday, 23:50. Final GDP dipped to 0.2% in Q2, although this beat the estimate of 0.0%. The markets are expecting a strong gain in Q3, with a forecast of 0.6%.
6. 30-year Bond Auction: Thursday, 3:45. 3-year bonds have been steady, with three straight yields at the 0.50% level. Will we see a change at the December auction?
7. Economy Watchers Sentiment: Thursday, Tentative. The indicator continues to point to pessimism, with readings well below the 50-level throughout 2016.
8. BSI Manufacturing Index: Thursday, 23:50. This important manufacturing indicator rebounded in Q2, with a reading of 2.9 points. This easily beat the forecast of -6.5 points. The upward trend is expected to continue in Q3, with the estimate standing at 3.4 points.
9. Preliminary Machine Tool Orders: Friday, Tentative. The indicator remains in negative territory and has posted consecutive declines since September 2015. No major change is expected in the November report.