USD JPY Is Сonsolidating Around 100 - 22.7.2013

The Japanese yen rose on Monday. The USDJPY currency pair is currently trading around 100, due to the confident victory of the governing bloc by the Prime Minister, Abe during the elections to the upper house of parliament. Now, when the government is effectively propped up by both parliament houses, the steps by Abe towards economic growth fiscal support receives additional reinforcement. Thus, we are left with even less doubt that the USDJPY will reach for the new five-year highs in the mid-term. There is the consolidation around 100 at the moment, but in our opinion, this is just a short break before the pair jumps upwards and this may happen pretty soon. We are waiting for the employment statistics release, the US GDP growth data and the Fed meeting - all of this will take place at the end of next week.

The significantly important data are not planned to be released for today. Only the secondary home sales in the United States will be published in the evening. Therefore, the negatively neutral sentiment on the dollar that we have seen over the past week can be maintained. In general, we do not expect any significant movements in the FX market during the upcoming week. Wednesday seems to be the nearest interesting day in terms of macro statistics, when the data on inflation in Australia for the second quarter comes out. On the same day, we will see the Eurozone PMI’s for June. So far, Aussie and the euro are close to the upper limits of the range - 0.9290 and 1.3180 set last week, so the data improvement may maintain their gains vs. the dollar a little more.

The UK GDP growth estimate for the second quarter is coming out on Thursday. The British pound showed the best dynamics among the major currencies vs. the US dollar last week. The GBPUSD is currently around 1.53- 50% Fibonacci level for the movement from 1.5755 down to 1.4815 - an important technical resistance. Technical indicators still confirm the growth possibility in the short term. Overcoming the resistance at 1.53 may cause prices to increase to 1.54, and the good economic growth rate data may be a necessary catalyst for the movement beginning. Market participants are expecting the data to be improved from 0.3% (growth in the first quarter) to 0.6%, but at the same time, there may be the risk of the GBP downfall occurred in case of a negative "surprise".