GBPJPY Potential Reversal Zone – Probable Price Path
The implementation of the first phase of the Sino-US trade agreement is in good condition, supporting the performance of risky currencies. The US dollar index closed down 0.3% to 93, terminating the two-day rise. Inflation expectations are heating up, but the response to the auction of the two-year Treasury bill has been satisfactory. The increase in the yield of the Treasury bill has narrowed, and the increase in the 10-year yield has narrowed from a maximum of 6 basis points to 3 basis points to close at 0.68%
White House economic adviser Kudlow said that the focus of the US in the first phase of the Sino-US trade agreement is shifting to the protection of intellectual property rights and forced technology transfer. He believes that Trade Representative Lighthizer is satisfied with the implementation of the agreement, but the Sino-US relations are more Complex, with many problems.
US economic data is mixed. The annual rate of sales of new homes in the United States in July was 901,000, the highest since the end of 2006; the Consumer Confidence Index of the World Large Enterprise Research Association fell from 91.7 in July to 84.8, which was far below market expectations of 93, a record high New low in the past six years. Hurricane Laura is expected to make landfall in the U.S. Gulf of Mexico later, where more than 80% of its oil production capacity has been shut down. New York spot oil hits a five-month high
GBP: The Secretary of State for Business, Energy and Industrial Strategies, Sham Ho-wen, stated that the UK must carefully restart the economy gradually and urge companies to provide employees with more flexible work arrangements. The government will focus on creating employment opportunities for young people
JPY: Japan’s July service industry producer price index rose 1.2% year-on-year, the largest increase in the past four months, and higher than market expectations of a 0.8% increase. Japanese Minister of Economic Affairs, Nishimura Yasunori believes that the new round of the epidemic is more severe than before, and there is a chance to declare a state of emergency again in the future.
From a technical and trading perspective,the GBPY has been consolidating in a bullish continuation pattern, a close today at current levels or higher than 140.25 should see bullish exposure rewarded with the potential for prices to extend higher to test the equality objective sighted at 145.26. A closing breach of 138.25 would negate the bullish breakout thesis and see prices return to test support to 136
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