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Forex pairs in this Article » USD/JPY
The Japanese Yen rose in the aftermath of Japan’s upper-house election. The US Dollar may fall if June’s New Home Sales report proves disappointing.

Talking Points

  • Yen Gains, Nikkei Falls in the Aftermath of Japan’s Upper-House Election
  • Dollar Eyes US New Home Sales Data to Shape Fed Policy Expectations
The Japanese Yen outperformed against its leading counterparts to start the trading week, adding as much as 0.9 percent on average and mirroring a pullback in the benchmark Nikkei 225 stock index. The newswires are chalking up the move to disappointment in the outcome of Japan’s upper-house election held over the weekend.

While the ruling coalition put in a strong showing and expanded its mandate as widely expected, Prime Minister Shinzo Abe’s LDP party failed to secure outright majority. That means Abe now faces intra-coalition negotiations with the New Komeito party to push through his agenda, which may make for a tougher slog on some of the reforms eyed by the administration.

Looking ahead, a quiet economic calendar in European hours is likely to see traders looking ahead to the US data docket, where June’s Existing Home Sales report is in focus. Expectations call for an increase to 5.25 million, marking the highest reading since November 2009.

A strong print may reinforce expectations of a cut-back in Fed QE asset purchases, boosting the US Dollar. News-flow out the world’s largest economy has proven somewhat lackluster relative to economists’ forecasts over recent weeks however, leaving the door open for a downside surprise that weighs against the greenback.

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Asia Session:

GMT

CCY

EVENT

ACT

EXP

PREV

5:00

JPY

Supermarket Sales (YoY) (JUN)

2.7%

-

-1.2%

7:00

JPY

Convenience Store Sales (YoY) (JUN)

-

-

-1.2%

Euro Session:

GMT

CCY

EVENT

EXP/ACT

PREV

IMPACT

7:00

CHF

Money Supply M3 (YoY) (JUN)

-

9.7%

Low

Critical Levels:

CCY

SUPPORT

RESISTANCE

EURUSD

1.3103

1.3194

GBPUSD

1.5215

1.5334

--- Written by Ilya Spivak, Currency Strategist for Dailyfx.com

To contact Ilya, e-mail ispivak@dailyfx.com. Follow Ilya on Twitter at @IlyaSpivak

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