Japan – Average Cash Earnings
On Tuesday, the Japanese Ministry of Health, Labour and Welfare will release the year-over-year average cash earnings, which measures the changes in the total value of employment income collected by workers in the country over the past 12 months.
Since earnings are directly correlated with consumer spending, binary options investors consider a rise in the average cash earnings as a signal that the Japanese consumers will likely increase their spending. As consumer spending makes up a large portion of the Japanese GDP, it can predict the future strength of the Yen.
On June 30, the Japanese average cash earnings increased by 0.7% and the forecast for August is currently set at an additional increase of 0.9%
New Zealand – GDT Price Index
Later in the day, the Global Dairy Trade will release the GDT price index, which measures the changes in the average price of dairy products sold at auction in New Zealand.
Since the bulk of New Zealand’s exports to the world market consist of dairy products, the GDT price index acts as a leading indicator of the country’s trade balance because the rising price of dairy products ensures that foreign buyers have to purchase it at a higher price. Therefore, the binary options traders use this data to predict future trade balance, which helps in the valuation of the New Zealand Dollar against other major currencies.
In July, the GDT price index decreased by 10.7% after decreasing 5.9% in June. If the current trend continues, it would likely push the GDT Price index further down in August.
Trade Recommendation for the NZD/JPY
The NZD/JPY has remained in a strong downtrend since April 22, when the pair formed a bearish pin bar. Over the last few months, the NZD/JPY also formed two downtrend lines, a long-term trend line and the second, stiffer, intermediate downtrend line.
On July 10, the NZD/JPY price finally broke above the intermediate downtrend line, but a lack of bullish momentum in the market failed to carry the price further up. As a result, the NZD/JPY price was capped around the resistance zone near 83.00.
The NZD/JPY once again tried to break above the 83.00 level on July 28; however, once again the bears prevailed.
Since July 28, the NZD/JPY has traded within a narrow range between 81.20 and 83.00.
As the GDT Price Index in New Zealand is expected to once again decrease over the past month, and by contrast, the Japanese average cash earnings are expected to increase, the fundamental outlook for the NZD/JPY would remain bearish for the week.
Under the circumstances, it is recommended that traders consider placing a PUT order for the NZD/JPY with their binary options brokers once the price closes below the 81.20 level.
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