The Japanese yen is almost unchanged in the Tuesday session. Currently, USD/JPY is trading at 104.09, up 0.04% on the day.
Japan second-estimate GDP beats consensus
Japan’s GDP reports have followed the trend we’ve seen across the major economies. Growth in the second quarter of 2020 was a disaster, courtesy of Covid-19, which led to a severe disruption in economic conditions. This was followed by a rebound in Q3, with positive economic growth. Some economies, like the US and UK, reported GDP swings in the double-digits. In Japan, the ups-and-downs in economic growth have not been as drastic. In the second quarter, the economy contracted by 7.9%, which was revised upwards from 8.1%. Second-estimate GDP in Q3 came in at 5.3% – this did not erase the losses of Q2, but nonetheless was upwardly revised from the initial reading of 5.0%.
Will a Brexit deal be signed ahead of the December 31st deadline? It is not only British and European companies that will be adversely affected if an agreement is not reached in time. Foreign companies also rely on the smooth movement of goods between the UK and the EU, and Japanese companies are anxiously monitoring the Brexit talks. Japan has a free-trade agreement with the EU, and Japan’s parliament has just ratified a free-trade deal with the UK. If London and Brussels can hammer out an agreement, Japanese manufacturers in the UK and Europe would enjoy unrestricted access to both markets. This would be excellent news for companies such as Nissan, the giant automaker, whose auto plants in the UK rely on EU-made auto parts.
USD/JPY Technical Analysis
With USD/JPY drifting on Wednesday, support and resistance lines remain in place.
- USD/JPY faces resistance at 104.74. This is followed by resistance at 105.28
- 103.66 is the first line of support. Below, there is support at 103.12, protecting the round number of 103.00
- The 20-day MA line remains relevant. Currently, it is situated slightly above the pair.
