The Japanese yen started gaining against the greenback in the Asian session yesterday following the report of better than anticipated manufacturing PMI for November. However, the 52-year low US unemployment claims and narrowing of trade deficit enabled the US dollar to rebound sharply later in the day. Overall, the USD/JPY pair rose from a low of 114.80 to a high of 115.50 in the last 24 hours.
The flash data published by the au Jibun Bank indicates that Japan’s manufacturing PMI (purchasing managers’ index) rose to 54.20 in November, from 53.20 in the prior month and greater than the figure of 53.50 anticipated by economists.
Likewise, the flash manufacturing output index increased to 53.50 in November, from 50.60 in October. Also, the flash services business activity index jumped to 52.10 in November, from 50.70 in the earlier month. Overall, the flash composite output index surged to 52.50 in November, from 50.70 in the prior month.
Preliminary data published by the US Bureau of Economic Analysis indicates that the country’s economy expanded by 2.10% in the September 2021 quarter, compared with 6.70% GDP growth in the June 2021 quarter. The advance estimate pegged the GDP growth at 2%. Economists had anticipated the economy to grow by 2.20% in the third quarter.
On an annual basis, the current dollar GDP rose by 8.10% (or $446 billion) to $23.19 trillion in Q3 2021. In the previous quarter, GDP surged 13.40% (or $702.80 billion). Real gross domestic income grew by 6.70% in the September 2021 quarter, up from 4.30% in the June 2021 quarter.
The Census Bureau stated that durable goods orders declined 0.50% m-o-m in October, following a drop of 0.30% in the earlier month and disappointed economists who were forecasting growth of 0.20%. The decline was led by a drop in orders for commercial aircraft.
Core capital goods orders, devoid of aircraft and military hardware, increased 0.60% m-o-m in October, following an upwardly amended 1.30% rise in September, and surpassed the 0.50% growth anticipated by economists.
According to the Department of Labor, the first-time unemployment claims declined to 199,000 in the week ending November 20, from 270,000 (upwardly amended from 268,000) in the earlier week and blew away the market’s expectations for a decline in the unemployment claims to 259,000. The reported figure is the lowest level since November 15, 1969, when the count of jobless claims was 197,000.
The four-week moving average was 252,250, down from 273,250 (upwardly amended from 272,750) in the earlier week. Again, the reported figure is the lowest level since March 14, 2020, when the average jobless count was 225,500.
Data published by the Census Bureau indicates that the goods trade deficit narrowed to $82.90 billion in October, from $96.30 billion in the prior month. The reported figure was better than the $94.90 billion deficit anticipated by economists.
Exports of goods surged 10.70% to $157.40 billion. The increase was driven by a 16.60% rise in the sales of foods, feeds & beverages. Automotive vehicles posted a growth of 14.40%. Industrial supplies recorded an increase of 11.90%.
Imports grew by 0.50% to $240.30 billion. The increase was led by a 5.70% growth in automotive vehicles. Foods, feeds & beverages posted a 1.90% rise. However, industrial supplies fell by 1.20%.
As per Census Bureau, preliminary wholesale inventories rose by 2.20% m-o-m in October, following a rise of 1.40% in September and disappointed economists who were anticipating only a 1% growth in the wholesale inventories for the reported period.
The reported figure reflects the 15th successive month of gains and at the robust rate since the organization started documenting the relevant data in 1992. Non-durable goods posted an increase of 2.70% m-o-m in October. Likewise, durable goods inventories increased 1.90% during the same period. On a y-o-y basis, wholesale inventories grew by 14.30% in October.
According to the Census Bureau, new home (single-family) sales were 745,000 units in October, compared with 742,000 units in the prior month. Economists were anticipating a surge in the new home sales to 801,000 units. The reported figure is 23.10% lower than the October 2020 estimate of 969,000. The median sales price of new houses sold in October was $407,700. The average sales price stood at $477,800. At the end of October, 389,000 units of new houses were available for sale, reflecting a supply of 6.30 months at the prevailing sales rate.
The impressive decline in unemployment claims and narrowing of the trade deficit is expected to keep the greenback slightly bullish against the yen in the days ahead.
The historical price chart indicates that the US dollar is rising after testing the support at 107.60. The next resistance is anticipated only near 121.30. Additionally, the currency pair is trading above its 50-day moving average, while the MACD indicator has a positive reading. Therefore, we are anticipating the currency pair to remain in an uptrend in the days ahead.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
